India’s welfare budget, 2016-17

The Indian government has no immediate plans or proposals to institute a scheme of ‘unversal basic income’ in place of the myriad social welfare scheme run by the country at present, the finance ministry said in response to a query.

The clarification that there is ‘no proposal for a universal basic income scheme’ comes in the wake of a similar idea floated by this year’s Economic Survey of India, the annual pre-budget document released by the same ministry documenting the condition of the economy.

“The universal basic income (scheme) must be embraced in a deliberate, phased manner as it allows reform to occur incrementally — weighing the costs and benefits at every step,” the economic survey, tabled last month, said.

India spends about 4 trillion rupees on various subsidy programs such as those on fertilizers, food rations, fuel and so on. In addition, it spends another equivalent or higher amount of other ‘free’ schemes for the poor, such as the National Health Mission, free hospitals and so on.

Out of the total budget of around 18 trillion rupees, about half is estimated to go towards services — such as posts, education, hospitals, culture and so on — for which the money can be obtained from the users via service charges. The remaining goes towards services for which money can be easily obtained from users — such as defence, funding of strategic and higher research and so on.

However, if the Rs 9 trillion is directly provided to the citizens, each family of four will get only around Rs 2,500 a month.

On the other hand, its proponents believe that the scheme of transferring money to citizens instead of goods and services will result in zero leakage. At present, subsidy programs such as the food distribution scheme — which costs over Rs 1 trillion per year, and the fertilizer subsidy program — which costs around Rs 700 bln per year — have reputations of being very inefficient due to leakages in the supply system.

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