Indian state to introduce a universal basic income

The concept of a universal basic income has gained increasing traction in recent times as a way of providing citizens with financial security in the face of volatile labour markets and the advance of workplace automation. Now, the Indian state of Sikkim is set to roll out such a scheme to its 610,000 citizens by 2022. The eyes of the world will be watching.

Sikkim landscape
Sikkim landscape

Wikimedia Commons

Green World

An Indian state is set to become the first to roll out a universal basic income (UBI) to all its citizens.

The Sikkim Democratic Front (SDF), the ruling party of the north-eastern state of Sikkim, has announced that it will be including the commitment in its manifesto for the state assembly elections in April or May 2019, with a view to implementing the system of unconditional direct cash transfers in 2022.

Sikkim is India’s least populous and second smallest state, with a population of 610,000, and has also led the way in environmental policy in the the country, banning plastic water bottles and styrofoam products in 2016.

Speaking to The Indian Express, Prem Das Rai, SDF MP in the Lok Sabha, the Indian lower house, said: “Our party and Chief Minister Pawan Chamling, who is the longest serving Chief Minister, are committed to bringing in Universal Basic Income. This, we will do three years of coming back to power in the state.

“UBI is a scheme that a number of economists have talked about and it works well in developing countries. It has been tested even in India, debated within the Finance Ministry as early as 2017.

“It has been tried in Gujarat, Madhya Pradesh and tribal belts with fairly large samples and it has shown it works. Basically, it’s an income given to families irrespective [of] what they do. In Sikkim, it will be for everyone and every household.”

A UBI has gained increasing traction in recent times – its introduction is an official policy of the Green Party of England and Wales – as a way to reform welfare systems and to insulate citizens’ livelihoods against insecure labour markets and the advance of automation.

Questions abound about how such a scheme would be funded. According to Rai, the SDF has already looked into how to fund a UBI; he suggested that the implementation of hydropower projects, which have made Sikkim a surplus power generating state, would be sufficient in providing funding for the scheme.

“The state produces 2,200 megawatts (MW) and it will go up to 3,000 MW in the next few years,” Rai said. “The state’s requirement is only 200-300 MW and the rest goes to power trading firms. When this money comes in, we as SDF feel it’s people’s money and it should be utilized for them.”

The SDF’s vision is that existing welfare payments and allowances would be combined and subsumed into the UBI, which would then be paid directly to citizens every month. Additional funding could potentially be procured from tourism while the state intends to restructure some social schemes and its tax structure to find extra resources to bolster the scheme.

Rai concluded: “It’s not just a feasible idea, but a very positive idea.”