Economic Survey advocates Universal Basic Income

Finance Minister Arun Jaitley tabled the Economic Survey 2016-17 in Parliament today and the Survey advocates Universal Basic Income (UBI) Scheme as an alternative to plethora of State subsidies for poverty alleviation
Economic Survey advocates Universal Basic Income

The Economic Survey 2016-17, tabled in Parliament today by Union Finance Minister Arun Jaitley, has advocated the concept of Universal Basic Income (UBI) as an alternative to the various social welfare schemes in an effort to reduce poverty. The Survey juxtaposes the benefits and costs of the UBI scheme in the context of the philosophy of the Father of the Nation, Mahatma Gandhi.

The Survey says the UBI, based on the principles of universality, unconditionality and agency, is a conceptually appealing idea but with a number of implementation challenges lying ahead especially the risk that it would become an add-on to, rather than a replacement of, current anti-poverty and social programmes, which would make it fiscally unaffordable.

Based on a survey on misallocation of resources for the six largest Central Sector and Centrally Sponsored Sub-Schemes (except PDS and fertilizer subsidy) across districts, the Economic Survey points out that the districts where the needs are greatest are precisely the ones where State capacity is the weakest. This suggests that a more efficient way to help the poor would be to provide them resources directly, through a UBI.

Exploring the principles and prerequisites for successful implementation of UBI, the Survey points out that the two prerequisites for a successful UBI are: (a) functional JAM (Jan Dhan, Aadhar and Mobile) system as it ensures that the cash transfer goes directly into the account of a beneficiary and (b) Centre-State negotiations on cost sharing for the programme.

The Survey says that a UBI that reduces poverty to 0.5 percent would cost between 4-5 percent of GDP, assuming that those in the top 25 percent income bracket do not participate. On the other hand, the existing middle class subsidies and food, petroleum and fertilizer subsidies cost about 3 percent of GDP.

The Survey has been prepared by chief economic adviser in the Finance Ministry Arvind Subramanian who said the adverse impact of demonetisation on GDP growth will be transitional. The survey projects the economy to grow in the range of 6.75 percent to 7.25 percent in the next fiscal year 2017-18 in the post-demonetisation year.


Agriculture sector is estimated to grow at 4.1 per cent in 2016-17 as opposed to 1.2 per cent in 2015-16; the higher growth in agriculture sector is not surprising as the monsoon rains were much better in the current year than the previous two years.

The total area coverage under Rabi crops as on January 13, 2017 for 2016-17 is 616.2 lakh hectares which is 5.9 per cent higher than that in the corresponding week of last year.

The area coverage under wheat as on January 13, 2017 for 2016-17 is 7.1 percent higher than that in the corresponding week of last year. The area coverage under gram is 10.6 percent higher.


â–  Gross domestic product (GDP) growth in 2016-17 to dip to 6.5%, down from 7.6% in last fiscal

â–  Economic growth to rebound to 6.75 to 7.5% in 2017-18

â–  Economic Survey sees fiscal windfall from Pradhan Mantri Garib Kalyan Yojana, low oil prices

â–  Fiscal gains from Goods and Services Tax (GST) will take time to realise

â–  Growth rate of industrial sector estimated to moderate to 5.2% in 2016-17 from 7.4% last fiscal

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