Economy

UBI can be a game changer

Experiments carried out in Indore have shown positive behavioural changes among people

 
By Sarath Davala
Last Updated: Monday 25 February 2019
Illustration: Tarique Aziz

Universal Basic Income (UBI), if properly implemented, can transform people’s lives. An experiment carried out by Ahmedabad-based non-profit Self Employed Women’s Association (SEWA) between 2011 and 2013 in Madhya Pradesh’s Indore district showed positive results.

SEWA zeroed in on UBI and conducted research for 18 months to determine its feasibility. There was initial scepticism, as paying direct cash was never a part of our welfare culture. As part of the initiative, basic income was transferred directly into the bank accounts of beneficiaries across eight villages, while 12 were left out. The impact showed that majority of the beneficiaries (over 66 per cent) used the ready cash for constructive purposes. While some used the money to improve farm production, others invested in livestock. Education also became a priority and many families sent their children to better schools. As the UBI amount was fixed, it helped people plan investments in a smart way. A second pilot was also launched at the same time—the Tribal Village Unconditional Cash Transfer—where two similar tribal villages having SEWA presence were compared. While in one village everyone received basic income transfers, in the other no one did.

Also read: ‘Universal Basic Income won’t make people lazy, but afford them more choice’

SEWA initially provided Rs 200 to adults and Rs 100 to children every month. After a year, the money paid to adults was hiked to Rs 300 and a half of it was paid to children under 18. As part of the tribal pilot, adults received Rs 300 and children Rs 150 for 12 months. As part of the impact, researchers found that the beneficiaries invested in sanitation and drinking water supply. Many used it to improve their household energy sources. In 2017, SEWA conducted another study to know the long-lasting impact, if any, of the pilot project in the two tribal villages. It was found that many of the behavioural changes like improved food consumption and the wish to seek better healthcare remained unchanged. Small farmers spent more time on their farms and stopped borrowing from money-lenders during the sowing season. Enterprises started by women continued to flourish. The residents even started a grain bank at the village level.

When former chief economic adviser to the Government of India Arvind Surbramanian wrote the 2018 Economic Survey, he was inspired by the SEWA study. Several states have realised the importance of cash transfer inspired by Telangana’s Rythu Bandhu and have come up with their own versions. In this year’s budget, the Union government announced PM-KISAN, which promises Rs 6,000 a year to landholding farmers with holding size of up to 2 hectares. As far as UBI is concerned, Sikkim is planning to roll it out by 2022. However, the crux is, though cash is important, the way it is paid really matters. The SEWA model ensured that the transfer was universal, individual, monthly, direct and unconditional. So, if Sikkim or any other state launches UBI, these principles should be followed in letter and spirit. 

(The writer is vice-chairperson of the Basic Income Earth Network and the coordinator of India Network for Basic Income. He was also the research director of the SEWA study)

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