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Universal Basic IncomeTension-fraught Jammu and Kashmir (J&K) is laying plans to provide a Universal Basic Income (UBI) to all its residents living Below the Poverty Line (BPL). This plan is the first instance of an Indian state committing to a UBI policy.

Jammu and Kashmir’s State Finance Minister Haseeb Drabu proclaims that a UBI will prevent wastage of monetary funds. In a January 2017 budget presentation, Drabu announced that the J&K would use direct benefit transfers. This means that the government deposits money directly into individual bank accounts.

Economic experts have for long endorsed a UBI. According to Pranab Bardhan, emeritus professor of economics at the University of California at Berkeley, Below the Poverty Line (BPL) lists in most Indian states exclude persons legally designated as poor, while numerous well-off families succeed in bribing their way onto the lists.

In Jammu and Kashmir, where geopolitical turmoil wreaks havoc on the economy and the public’s standard of living, UBI systems could tackle poverty. The J&K has a poverty rate of 21.63 percent. Additionally, the unemployment rate among young people is an alarming 24.6 percent.

In 2011, the Self-Employed Women’s Association (SEWA), in a project funded by the United Nations Children’s Fund (UNICEF), launched pilot studies of the effectiveness of such UBI grants in India. Several results stood out:

  1. Recipients often used the money to improve their housing, latrines, walls and roofs. Additional funds were employed to take precautions against malaria.
  2. Nutrition has advanced: the average weight-for-age of young children increased, particularly among girls.
  3. Diets also improved, as commerce shifted from ration shops to markets. More fresh fruits and vegetables consequently became affordable.
  4. Improved health led to superior rates in school attendance and performance.

The SEWA/UNICEF trial yielded greater benefits for working class families, women, and persons with disabilities. Universal Basic Income helps reduce debt and renders less likely the need to go into more significant debt. Individuals reduced the need to borrow money for short-term purposes.

UBI will replace several current welfare schemes, compelling cooperation between the central Indian government and Jammu and Kashmir. Aside from lowering the cost of delivering social programs, Drabu declares UBI plans will deter leakages that plague many current social programs. Existing policies have left over 350 million people mired in poverty, even after two decades of high economic growth.

Universal Basic Income in Jammu and Kashmir will replace several current welfare schemes, necessitating cooperation between the central Indian government and J&K. In addition to reducing the expense of delivering the social projects, Drabu maintains UBI will deter leakages that plague many current social programs.

Heather Hopkins

Photo: Flickr