Universal Basic Income – A Silver Bullet To End Agrarian Distress? Part 1 of 2

Universal Basic Income

Since the last 7 decades, successive governments in India have tried their best to find a long-term solution to address the country’s ailing farm sector. But despite their best efforts, the Indian agriculture sector continues to stay distressed.

Lack of direct market access, lack of easy access to Institutional Credit – leading to borrowings from informal sources at higher interest rates, production glut – leading to lower price realizations, lack of modern warehouses – leading to distress sales, etc. are some of the major reasons cited for the perpetual agrarian crisis in India.

In the last few years, the Central Government has launched a slew of pro-farmer schemes to achieve sustainable agricultural growth. Higher Minimum Support Prices (MSPs), Operation Green (to help TOP – Tomato, Onion, Potato farmers), Crop Insurance, Soil Health Cards, etc. are some of the welfare schemes that have been announced to achieve the Hon. Prime Minister’s ambitious vision of “Doubling Farmers’ Incomes” by 2022.

At the same time, there has been a steady emergence of alternative perspectives to end farmers’ woes. ‘Farm Loan Waivers’ is one such perspective that we have comprehensively covered in our previous blog posts. You can read about it here and here. ‘Universal Basic Income (UBI)’ is another such perspective that has gained traction recently. In this blog post, we will cover the basics of UBI and similar farmer-centric schemes aimed at tackling India’s agrarian crisis.

What is UBI?

UBI is the economic model of providing all citizens of a country or other geographic area a specific sum of money, irrespective of their income, resources or employment status. The primary objective of UBI is to reduce poverty and increase equality among citizens.

Countries like Norway and Finland have implemented UBI, whereas others like Germany, Switzerland and France are experimenting with it.

UBI in India 

The idea of UBI was recently propagated in the Economic Survey 2016-17 that was tabled in the parliament by the Hon. Union Finance Minister Shri Arun Jaitley in January 2017.

As per the Survey, apart from increasing equality amongst Indian citizens, the most important benefit of UBI would be to address misallocation, exclusion and leakages in various government-run schemes that are aimed at rooting out poverty and inequality.

While UBI is not implemented nationally in India, welfare schemes inspired by UBI have been launched for farmers. Two such notable schemes are Telangana’s ‘Agriculture Investment Support Scheme (Rythu Bandhu)’ and Odisha’s ‘Krushak Assistance for Livelihood and Income Augmentation (KALIA)’.

1. Rythu Bandhu, Telangana 

Aimed at taking care of the initial investment needs of every farmer in the state, Rythu Bandhu was launched by the Telangana Government in May 2018 with a total budget of Rs. 12,000 crores for FY 2018-19. The scheme provides a grant of Rs. 4,000/- per acre, per farmer, each season, for the purchase of inputs like Seeds, Fertilizers, Pesticides, Labour and other farm investments.

While the scheme definitely has the advantage of treating farm distress directly, many feel that it is disproportionately directed towards larger farmers since it provides financial assistance on a per acre basis and thus has nothing for Landless Labourers. 

2. KALIA, Odisha 

Primarily aimed at benefiting Smallholder Farmers (SHFs), Cultivators and Landless Agricultural Labourers, KALIA was launched by the Odisha Government in December 2018 with a total budget of Rs. 10,180 crores spread over 3 years.

The scheme provides all farmers Rs. 10,000/- per family (Rs. 5000/- each for Kharif and Rabi seasons) as assistance for cultivation. While the scheme is not linked to the size of landholdings, proponents believe that the scheme will greatly benefit Sharecroppers and Cultivators, most of whom own little or no land in the state.

In both these schemes, the grant amount is directly transferred to the farmers’ bank account through Direct Benefit Transfer (DBT) to plug any leakage – something that the UBI proposed by Shri Arun Jaitley aims to achieve.

In the next part of this two-part series, we will examine if UBI can indeed be a silver bullet to end farmers’ woes or if any other solution(s) exists to soothe India’s agrarian distress.

 

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