Is India Moving to Adopt Basic Income?

The world’s largest democracy might be moving towards adopting Basic Income. An official report from India’s government praised Universal Basic Income or UBI as a “powerful idea” for fighting poverty.

The 2016-2017 Economic Survey stated that UBI would be a more effective means of combating poverty than the country’s existing social services benefits, The Independent reported. Despite that no formal announcement of basic income or test programs are expected.

This is interesting and exciting news because a basic income experiment in India would be the largest adoption of a new welfare system; since the United States set up Social Security in the 1930s. Like American Social Security; Indian UBI would be a radical break with the past, and a new model for society.

Siddharth Nagar slums at Worli Naka. Express Photo by Vasant Prabhu. 07.04.2015. Mumbai.

The Challenge and Opportunity of UBI in India

The challenges India faces in adopting basic income are vast. The nation has a population of 1.3 billion people and much of the country lacks modern infrastructure.

To make matters worse much of the population is still trapped in the past, only 53% of the population has a bank account, The Indian Express reported. Of those people only 15% used the account to receive or send payments.

Basic income would be a great means of getting those people involved in the financial system. Yet it also presents a challenge, how do you distribute the UBI payments to people who do not even have a bank account?

One potential solution is smartphones and digital wallets. Statista estimated that there were 292 million smartphones in India in 2016, a number that is expected to grow to 467.9 million by 2021. Basic income would be an excellent means of increasing smartphone usage and getting the population connected.

Another advantage is that technologically-driven UBI has the advantage of bypassing India’s notoriously corrupt and ineffective bureaucracy. Money would be distributed directly to the people who needed it; instead of being diverted into the pockets of bureaucrats, or wasted on pet projects by social workers.

A successful UBI system in India would create a model that can be applied in other large and diverse countries such as the United States and Russia. It might also be adopted in other developing regions such as Africa and Latin America.

Will India Lead the Way in Basic Income?

India has some advantages in adopting UBI, the greatest of which might be that it lacks an entrenched social-services bureaucracy; like the ones that exist in Europe and the United States. There is a massive government infrastructure in India; but it has little interaction with most citizens.

Another advantage India may have is a lack of political parties; such as the Republicans in United States, that are hostile to the idea of welfare. Many antipoverty efforts in the United States have failed because of Republican opposition and interference.

The logistics of basic income in India will be vast. The other nation experimenting with it right now Finland is small; it has a population of 5.439 million people. Finland is also a technologically advanced country with a well-developed banking system, a high level of social and political stability and a relatively uniform population. Therefore in many ways it is the opposite of India a vast multiethnic federation; that is politically volatile, and lacks a modern financial system.

Finally India has the opportunity to build a new kind of technologically-driven financial system that serves average people rather than companies or the wealthy. This might lead to the development of a powerful social, financial and political technology that would give India a vast advantage in the global marketplace.

If India’s government figures out how to combine basic income with new technologies such as smartphones, cryptocurrencies and digital wallets it might lay the basis for a new economic system. Such a system would be a paradigm shift from current models of currency, governance and welfare delivery that will face tremendous opposition from entrenched interests.

Is it a Breakthrough for Basic Income?

The 2016-2017 Economic Survey might mark a breakthrough for basic income. It can be compared to the Beveridge Report; the 1942 document that laid out the blueprint for the British welfare state.

That document recommended a comprehensive system of unemployment, sickness, maternity and pension benefits that was adopted by His Majesty’s Government in the National Insurance Act of 1946. One has to wonder if this is India’s Beveridge Report or something like it.

The Economic Survey might be a sign that the Indian people are sick and tired of their dysfunctional government and welfare system. The Beveridge Report ushered in a paradigm shift; because it struck a nerve in the World War II era United Kingdom. The British were sick and tired of their dysfunctional economy and wanted something new.

Only time will tell if The Economic Survey marks the beginning of a paradigm shift like The Beveridge Report. Yet it is still an important breakthrough, because it indicates that Basic Income is becoming an accepted idea. A center-right government in a very conservative country is actively considering it.

Another important development is that basic income is being considered outside of Europe in a developing, non-Christian country. That might proves it is an idea whose time has come.

If basic income can work in India it can work anywhere. India might be the place that makes or breaks Universal Basic Income.