Realist, not conformist analysis of the latest financial, business and political news

India’s Excellent Idea For A UBI – Pity It Comes From Congress Tho’

The Congress Party has floated the idea of a universal basic income in India – an excellent idea but it’s a bit of a pity given the source. For Congress tends to be the party adhering to the old, Nehru, style detailed management of the economy, precisely the thing that a UBI would blow up. Thus the assumption has to be that if they did implement it they’d do so badly.

As to why it’s a good idea – it’ll make India richer:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] India’s main opposition Congress party has said it will implement a variation of a universal basic income (UBI) targeted at the poor if it wins the country’s upcoming national election. The announcement, dismissed by the ruling Bharatiya Janata party (BJP) as financially irresponsible, is the first major shot in an election battle likely to be replete with populist giveaways to voters. “We have decided that every poor person in India would be guaranteed a minimum income after the Congress forms the government in 2019,” the Congress leader, Rahul Gandhi, told a farmers’ rally in the central state of Chhattisgarh on Monday. “No one will go hungry in India, no one will remain poor,” he said. [/perfectpullquote]

One reason it’s not a great idea is because it’s a minimum income guarantee, not a universal basic income. That means there will be qualifiers as to who gets it and that’s always been a problem in India. Who qualifies for any form of subsidy always having been waved around as a vote buyer at election time.

But the underlying concept, sure, great one. For India does have a welfare state and it’s a terrible, rotten, one. The state buys up crops, stores them, then distributes them as rations to the poor. There’s so much thievery in the system that most eligible don’t get their ration and even what they do get is shoddy. Instead of trying to run a parallel distribution system just give people the cash to buy in the regular markets.

That part of it is an excellent idea:

“It’s also true that the current systems fail badly in other ways. Purchasing grain to ship it around to special shops where it will be sold hugely under the market price is always going to be a leaky system. Some number of the middlemen will be sorely tempted to divert produce to sell onto the market and there’s considerable evidence that some succumb to that temptation. If people simply have money to buy on the standard market in the normal manner then it’s a lot easier to keep a control on that sort of thing.

However, the most important thing for the design of the American welfare system is the points they make about how the poor value being given goods as against being given money. $100 (far in excess of the amounts being discussed here) is worth more than $100 of food for example. Or $100 worth of medical care. There’s two reasons for this. One is simply that everyone values agency. The ability to decide things for oneself. And money does that. It’s possible to decide whether you want to purchase food, or to save a bit and buy a goat next week, or more fertiliser for the fields and so on. What the peasant on the ground would like to do with any increase in resources is most unlikely to accord with what some far away bureaucrat thinks said peasant ought to be doing. So, the choice itself increases value.”

If only it weren’t Congress proposing it. Perhaps I’m entirely wrong in this but I just don’t trust them to reduce government interference.

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5 years ago

Subsidy would accrue to the landowners around it, if the UBI/CD were to be funded by a land title fee then this would not be a problem, but it’s probably going to be funded by fining middle class productivity

5 years ago

It is quite amazing how the arithmetically challenged can never, despite overwhelming proof, never grasp the fact that UBI is just not feasible.

Quentin Vole
Quentin Vole
5 years ago
Reply to  Shadeburst

Doesn’t that depend on the amount of the UBI?

5 years ago
Reply to  Quentin Vole

It does indeed. Heavy emphasis on the *basic* means it can be done quite easily. Start saying it should be “living” or average of whatever and it isn’t.

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