Election Buying – Universal Basic Income Style

Graphic of a faucet dispensing gold coins into a bucket.

On February 1, Narendra Modi’s Hindu-Nationalist government unveiled the largest UBI scheme to date, with plans to furnish millions of impoverished farmers with 6000 rupees ($84) per year. This plan comes on the heels of a serious political contender Rahul Gandhi’s own announcement to establish a universal basic income, if elected in April, and also a devastating jobs report showing Indian unemployment at a 45 year high.

While many are touting this a major accomplishment for the UBI cause, it is hard to see it as anything more than a crafty political maneuver, if put in context of an increasingly contentious election.

For one, this is a fairly low stakes, low impact plan. Even with a price tag of $10.4 billion dollars, the extra spending, to be paid out to approximately 120 million farming families, will only increase the proportion of government spending to GDP from 3.3% to 3.4%. Though, the WSJ took care to mention that India was attempting to reduce its fiscal deficits. The WSJ also said that though $84/year does not seem like a lot, “where the rural poor often make less than a dollar a day, it is enough for some to live above the poverty line.” Which is set at what?

According to wageindicator.org a living wage in India, depending on location, for a family of two parents and two children can range between $167 and $238. Granted an unconditional extra $84 dollars would go a long way in that context. But in rural India, family sizes can often contain much more than two children. Basicincome.org found that the proposed cash handout would represent only a 3% benefit to a typical family, which requires 183,000 rupees to meet living wage requirements.

But it is not only farmers Modi is appealing to in the months before the election. Also on the docket is a massive tax break to wealthier urban residents, as he pushes the threshold for filing income taxes from 250,000 to 500,000 rupees.

In a country where farmers always seem to be given the short end of the stick, any amount of relief is welcome. But to see this as a breakthrough for universal basic income is nothing than to fall for a political stunt.