Economic Survey may suggest replacing subsidies with Universal Basic Income
Finance Ministry is likely to suggest a Universal Basic Income (UBI) for the poor in the Economic Survey 2016-17 to be tabled in Parliament on Tuesday January 31, 2017 at 1 pm.
Bloomberg reported that the ministry has suggested replacing subsidies with a universal basic income plan for the poor through direct transfers to their bank accounts. Finance ministry spokesperson DS Malik declined to comment.
The agency further reported that the Economic Survey 2016-17 has estimated India's growth rate to fall at 7%. Demonetisation may have shaved off 0.25-0.50 percentage points from GDP for the current fiscal, it reported as quoted in the Survey.
The Economic Survey of last year, i.e. 2015-16 had said, "Subsidies for the poor tends to attract policy attention. But a number of policies provide benefits to the well-off. We estimate these benefits for the small savings schemes and the tax/subsidy policies on cooking gas, railways, power, aviation turbine fuel, gold and kerosene, making assumptions about the definition of “well-off” and the nature of neutral policies."
"We find that together these schemes and policies provide a bounty to the well-off of about Rs1 lakh crore," it had said.
"We highlight that policies that are based on providing tax incentives will, in India, benefit not the middle class but those at the very top end of the income distribution. For example, the average income of those in the 20 percent tax bracket places them roughly in the 98.4th percentile of the Indian income distribution, and the corresponding figure for the 30 percent tax bracket is the 99.5th percentile," it said.