Prime Minister Narendra Modi-led government could announce a national social security scheme that will offer Rs 1,500 allowance for poor and unemployed citizens of the country. Though the idea is in its initial stage, the Modi government may announce the national social security scheme in the upcoming Budget 2017. At present, the government is discussing the pros and cons of such scheme that will have the huge impact on fiscal deficit. Under the scheme, the government will give Rs 1,500 allowance per month to poor and unemployed.
To address the issue of poverty, the Modi government is mulling a new social security scheme for poor and unemployed. A discussion is underway to finalise the basis of-of a national social security system and assess its impact on country’s economy. The government is currently discussing whether the scheme should be like a universal basic income or more focused support limited to the most vulnerable.
According to a report in the Economic Times, if the government plans to give Rs 1,500 to 200 million poor of the country, it will cost them about Rs 3 lakh crore. The government is discussing whether there should be universal basic income or the scheme should target specific groups. The impact of such scheme on fiscal deficit is also being discussed. “There is a thinking… pros and cons of having such a scheme are being examined,” a government official was quoted as saying.
The government is working to lowering the fiscal deficit to 3 percent of GDP in FY18, but the cost of the universal basic income could be a big problem. The government hopes to announce such social security scheme if resource generation rises in the wake of demonetisation and the rollout of the goods and services tax (GST). The biggest challenge before the government is the implementing of such a big programme.
“People are dragged into poverty due to droughts, declining agriculture opportunities, disease and so on. So the safety net provided by the government should be quite wide and that’s why this UBI (universal basic income) has some merit,” Chief economic adviser Arvind Subramanian had said in October.
The government is discussing whether the allowance of Rs 1,500 should be given to everyone living under poverty line or only to unemployed people with no source of income. Policymakers believe that Pradhan Mantri Jan Dhan Yojana accounts and the Socio-Economic and Caste Census of 2011 will play the key role in finalising the targeted groups.
The idea of universal basic income has been gaining ground across the world. Finland recently announced a basic income scheme for anyone seeking employment. Jammu and Kashmir government also reiterated its commitment towards the idea of a universal basic income during its budget presentation last week.