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Debate over universal basic income steps up as IMF weighs impacts

Is the universal basic income the answer for India and low- and middle-income nations?

14th August: An IMF paper has backed universal basic income as a better way of supporting low-income households than existing safety net programmes when these are “inefficient”.

The paper, using India as an illustration, says that replacing the food subsidies provided by the nation’s Public Distribution System with a UBI would address under-coverage of low-income households by the former. However, on transfer values, “a sizeable percentage of existing beneficiaries would lose from the reform, including many low-income households,” losses that would only be reduced, not eliminated, by recycling savings from an easier-to-administer system, it states.

In contrast, replacing India’s “inefficient energy subsidies” would both deliver “unambiguous distributional gains” and help address fiscal pressures, the paper argues.

The intervention comes as Development Pathways representatives also prepare to address the question of the impact of a UBI in the context of low- and middle-income countries. Rasmus Schjoedt, Development Pathways Associate, and Heiner Salomon, Development Pathways Economist, will present at the Basic Income Earth Network 2018 conference on Simulating the cost and impact of the gradual introduction of a UBI in low- and middle-income countries.

The IMF paper, Universal Basic Income in Developing Countries: Issues, Options, and Illustration for India, is available here.

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