Tag: UBI

34 functional teams to smoothen merger of UBI, PNB, OBC

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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A total of 34 functional teams have been formed to smoothen the process of merger of United Bank of India (UBI), Punjab National Bank (PNB) and Oriental Bank of Commerce (OBC), a senior official said.

The merger is scheduled to come into force from April 1 next year.

“Thirty four functional teams have been created to come out with solutions for the process of integration,” a UBI official told PTI.

A team comprises two members each from the three banks from different functional areas, he said.

“The functional teams will also try standardising the loan process, credit terms and benefits extended to the customers in the interim period till the merger comes into effect to avoid customer-related issues in the future,” the official said.

The UBI had conducted customer meets at Kolkata, Guwahati and Patna to allay their apprehensions about the future of banking, the official said.

UBI managing director and CEO AK Pradhan had earlier said that though the balance sheet merger is likely to happen by April 1 next year, it will take another three to six months after that for the HR and IT integration to be completed.

He had said the complete harmonisation among the three entities would take another 12 to 14 months after the merger.

Senior officials of the three banks had held a meeting recently.

The merger will make the new entity the second-largest bank in the country after the State Bank of India (SBI) with a total business volume of Rs 18 lakh crore.

This comes after the Centre’s announcement to consolidate 10 public sector banks into four.

Allahabad Bank will be merged with Indian Bank while the Union Bank of India, Andhra Bank and Corporation Bank will be amalgamated.

Canara Bank and Syndicate Bank will also be merged.

Last year, the Centre had approved the merger of Vijaya Bank and Dena Bank with Bank of Baroda that came into effect from April 1 this year.

In 2017, the State Bank of India had absorbed five of its associate banks and the Bharatiya Mahila Bank.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Famed French economist Thomas Piketty defends Congress’ minimum income guarantee scheme

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Thomas Piketty, professor at the Paris School of Economics, has supported the minimum income guarantee (MIG) proposed by Congress as the French economist believes India’s poor have been “badly treated by the country’s elite”, ThePrint reported.

“It is high time to move from the politics of caste conflict to the politics of income and wealth distribution,” Piketty told the news website in an email.

Piketty along with Professor Abhijit Banerjee, Ford Foundation International Professor of Economics at the Massachusetts Institute of Technology, was advising the principal opposition party in India on the proposed MIG scheme.

“Yes, we’ve been exchanging with the Congress together with Abhijit Banerjee (MIT) about how much it would cost and how to implement this,” Piketty confirmed. “My view is that a minimum income scheme would be highly welcome,” he added.

MIG or theoretically known as Universal Basic Income (UBI) is one of the most-discussed economic concepts in the world. The idea of a UBI for the poor is gaining traction in wealthier countries such as Finland and France.

Congress president Rahul Gandhi had earlier declared that if voted to power, his party would implement the minimum income guarantee to the poor.

The Modi government also announced a farm package in the Interim Budget. The Rs 75,000-crore PM Kisan Samman Nidhi Programme will provide Rs 6,000 to farmers owning lander under 2 hectares.

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Why Universal Basic Income may not be a good idea for India

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Ahead of the General Elections 2019, Congress is batting for the implementation of the minimum guarantee scheme, theoretically known as the Universal Basic Income (UBI) scheme.

The UBI — the unconditional cash transfer system — requires the economy to be financially strong to fund the programme, making it the key reason for developed countries to have an upper hand in implementing the scheme.

The UBI is one of the most debated topics, not only in India but across the globe. Some developed countries, including the Scandinavian countries, are running pilots and may eventually make it a social welfare norm.

For developed countries, the scheme is simply to fix the hurdles which are blocking the economy to achieve optimal growth. But when it comes to implementing UBI in a developing country, like India, it’s a different ballgame altogether.

Watch: P Chidambaram promises fiscal prudence even as Congress assures minimum income guarantee for poor families

According to Jayati Ghosh, an Economics Professor at Jawaharlal Nehru University, there are three key problems in implementing UBI in developing countries.

Firstly, “the policies in developing countries are weak,” according to Ghosh. She explained how developing countries have to strengthen their fiscal policies and make it more people-friendly so that when the scheme is implemented, people are able to bear the fruits.

Interview: Minimum income guarantee well thought out, party manifesto to spell out target group, says Congress leader Milind Deora

Secondly, in most developing countries, the “reach of the government is not much.” Here, she explains that, because of the vast population and the existing social class divide, it will be difficult for the government to cater to the needs of the people efficiently.

Lastly, the lack of funds. The Economic Survey, an annual report on the state of India’s economy, shows that there are only 7 taxpayers for every 100 voters in the country.

The lack of funds is one of the major hindrances coming in the way of a developing country like India to implement UBI. This is one of the main reasons why the government has said that if the UBI is implemented in India, the existing social welfare schemes will be done away with.

Watch: Government should not dip into RBI’s reserves to fund UBI scheme, says former CEA Arvind Subramanian

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Minimum Income Guarantee: An idea that is the need of the hour

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The conversation around an income guarantee for the poor is not new. In the Economic Survey of India 2016-17, the then chief economic advisor to the Government of India, Arvind Subramaniam had made a case for Universal Basic Income, suggesting that it was a path that needed to be adopted sooner rather than later. The Universal Basic Income is a fixed cash transfer to every resident of the country. The Economic Survey declared that Universal Basic Income  “could be to the twenty first century what civil and political rights were to the twentieth.” The price tag on a Universal Basic Income for a nation as populous as India would be back breaking.

There have been murmurs about the government veering towards some form of Universal Basic Income, ever since the BJP lost the state elections in the Hindi heartlands. And, the announcement by the Congress President Rahul Gandhi that “If voted to power in 2019, the Congress is committed to a Minimum Income Guarantee for every poor person, to help eradicate poverty & hunger” seems to be timed to pre-empt the eventuality of the government’s announcement. As a political move, it is one that will catch the attention of large chunks of the population. But, the billion dollar question remains, can India afford it? What Mr Gandhi has suggested is not so much a Universal Basic Income, as much as a targeted cash transfer to the poorest among Indians.

As per the Tendulkar committee (2009) report the percentage of extremely poor in India stands at 22 percent or 286 million people. Roughly one in five Indians lives in extreme poverty. The Rangarajan committee report (2014) estimates that 30.9 percent of the rural population, and 26.4 percent of the urban population is extremely poor. Even And, that is defined as a Monthly Per Capita Expenditure of Rs 1,407 in urban areas and Rs 972 in rural areas. In other words, the extreme poverty levels are defined as those people living on less than Rs 47 per day in urban areas, and less than Rs.32 per day in rural India. For a family of five, this translates into a monthly consumption expenditure of Rs 4,860 in rural areas and Rs 7,035 in urban areas. If we look at more recent figures, put up by the World Poverty Clock, where India has been immensely successful in lifting people out of poverty,   the extreme poverty figure is estimated at 3.6 percent of India’s population, close to 50 million people. And, between the Tendulkar committee report estimates and the World Poverty clock estimates is the population Mr Gandhi would want to address with his Minimum Income Guarantee scheme.

The question remains, can India afford it? And, the answer is simpler than it sounds – can India afford not to have income support for those who live on less than Rs 47 per day? In an earlier column on the Universal Basic Income, I had suggested that given the number of shrinking job opportunities for unskilled or semi-skilled labour, UBI would need to be considered sooner rather than later, as a means of staving off not just extreme poverty, but social unrest due to poverty.

What would be interesting to see is if the Minimum Income Guarantee programme subsumes all other poverty alleviation programmes or not. According to the Economic Survey of India, the central government already runs almost 950 central schemes that accounts for 5 percent of the GDP. Would the Minimum Income Guarantee scheme be in addition to these schemes, or instead of these schemes? Where would the extra money come from to run this programme, and not fall foul of the deficit to GDP ratio that India tries to adhere to?

One option is to increase direct taxes. And, there isn’t much space to do that. We are already a heavily taxed nation, and the tax base is too small to make a substantial dent on the money required to fund such a scheme. The other is to rationalise GST, and remove most of the items – bar those required for sustenance from the 0 percent bracket, and tax them at a nominal amount – like 3 percent. Also, the boost to the economy of between 50 million and 200 million being able to spend on basics, will bump up GDP, growth and incomes lifting incomes all around or that is the theory.

But how will a future Government of India define poverty?  Which figures will it use – the accepted Tendulkar committee figures, the more recent Rangarajan committee report figures, World Bank figures, or something else? Recently, the NDA government when it introduced the 10 percent reservation for economically weaker sections, defined economic weakness as a family income below Rs 8 lakhs per annum. While they may not be defined as living in abject poverty, this gives you a ball park figure below which different groups will agitate for income support.

Be it the BJP or the Congress, the time for income support is here. The thought is out of the genie’s bottle, and it will be acted on – sooner rather than later. If India wants to be a super power, it cannot do so with millions of fellow citizens living in abject poverty. The time for a social security net, that includes income transfer is here. The question is how can it be best implemented.

Harini Calamur writes on politics, gender and her areas of interest are the intersection of technology, media, and audiences.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Basic income support to cost at least Rs 1.5 lakh crore to the nation

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Domestic ratings agency India Ratings on Tuesday expects the interim budget to announce an income support scheme for the poor which may at least cost the Centre Rs 1.5 lakh crore per annum or 0.7 percent of the GDP for
the Centre and states combined and is better than any farm loan waivers.

In comments that come a day after the Opposition Congress promised to roll out an income support scheme if voted to power after the summer elections, the agency said it expects the forthcoming budget to have such a measure.

“The roll-out of income support as a core centrally sponsored scheme is a better option than debt waivers,” it said, adding that the government may announce a relief package for farmers while presenting the vote on account for FY20 in line with the Rythu Bandhu scheme of Telangana.

Stating that agrarian distress is not new and various governments deployed a number of tools to fight the same in the past such as an increase in public spending in rural areas, increasing minimum support price, enhancing
agricultural credit and enhanced extension activities, launching the rural employment guarantee scheme, writing off farm loans, providing direct income support and/or a combination of the ways.

In view of the upcoming general elections, the agency said the focus of both the Centre and the state budgets will be on measures to address the farmers’ woes.

If the interim budget announces an income support of say Rs 8,000 per acre per annum for marginal and small farmers, a marginal farmer and a small farmer would receive Rs 7,515 and Rs 27,942 per annum on average, respectively.

“The levels are significantly lower than the amount conceptualised under the universal basic income scheme for the poor proposed in the Economic Survey 2016-17. The support would cost the Centre Rs 14.68 trillion or (0.70 percent of GDP),” it said.

If it is rolled out as a core centrally-sponsored scheme, the cost would be split between the Union and states, with the Centre bearing 0.43 of GDP as its cost, and the states coughing out 0.27 percent of GDP.

It is not an easy option either ways, it said, as states finances will come under pressure. If it is rolled out as a core centrally-sponsored scheme, Andhra, Bihar, Chhattisgarh, Jharkhand, MP, Odisha, Telangana and UP will be under pressure as they have already announced farm loan waivers, and only Chhattisgarh and Jharkhand have “some fiscal space” to accommodate such
expenditure.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Universal Basic Income: Is it free money for everybody?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Congress president Rahul Gandhi on Monday made a huge electoral promise ahead of the general elections — a guaranteed minimum income for the poor across the country, much like the system of social security in the US.

But there have been questions on how the Congress proposes to fund it. Diverting funds from subsidy programmes would provide enough funds, Reuters reported quoting Congress leaders as saying.

Universal Basic Income (UBI) is one of the most-discussed economic concepts in the world. The idea of a UBI for the poor is gaining traction in wealthier countries such as Finland and France.

Watch: P Chidambaram promises fiscal prudence even as Congress assures minimum income guarantee for poor families

Let’s take a look at the benefits of UBI and how does it work.

What is Universal Basic Income?

It is basically a form of social security through which citizens of a country or a particular region receive an unconditional sum of money on a regular basis from the government, regardless of how much they earn from other sources.

How does it work?

The scheme functions on the concept of direct cash transfer, which puts more cash in the hands of citizens, thereby improving their everyday income. The idea is to have a direct transfer of funds instead of having indirect benefit schemes.

An economics professor at London School of Economics, Maitreesh Ghatak,  explained that UBI has three primary features – cash transfer, unconditional and universal – which essentially means it is an unconditional cash transfer to which every citizen of the country is entitled.

What are these features?

Detailed below is Ghatak’s explanation of these three factors:

• Cash transfer: UBI is a cash transfer scheme, as opposed to any other scheme that involves payment in kind, i.e. through specific goods or services. The cash transfer is done in a subsidised manner, or through coupons or vouchers.
• Unconditional: UBI is non-conditional, meaning it is not contingent on the recipient satisfying any compliance criteria to receive the assistance. This also distinguishes the concept from pensions, and unemployment and disability benefits, in the context of developed countries.
• Universal: UBI is universal, which means it is not meant for a specific group of people chosen on the basis of socio-economic or demographic criteria. Targeted assistance, on the other hand, caters to those below a certain income level, (e.g., child support or pensions) as opposed to every citizen.

Where has it been tried out?

Kenya, Finland, USA and India are among the countries who have tested or are testing UBI in some capacity or other. However, all these pilots came with conditions, which is not how the scheme works in its purest form.

Both Kenya and India’s pilots are restricted to rural areas. India ran two pilots for 12-17 months between 2011 and 2012, both in Madhya Pradesh. The first one was aimed at transferring funds to eight villages, while the second one was aimed at cash transfer to the inhabitants of two tribal villages.

The Kenyan pilot, on the other hand, is still running and the people of around 200 villages in the country are its beneficiaries. The pilot is expected to continue running for another 12 years.

Was UBI successful in the US?

The United States has a more comprehensive pilot running in the state of Alaska. The Alaska Permanent Fund, a constitutionally established permanent fund, pays a sum called Permanent Fund Dividend to all Alaska residents who have lived in the state for a full calendar year. The amount varies from year to year and depends upon a wide range of factors, including the stock market.

The UBI pilot in Finland, which started last year, involves transferring funds to 2,000 unemployed citizens for a period of two years. The motive was to see if this results in an increase in employment levels.

The above-mentioned pilots belong to two different types of countries – developed and developing. In developing countries, UBI is mainly adopted to eradicate poverty, while in developed countries, the scheme is implemented to boost growth by filling up infrastructural gaps.

What does critics have to say?

Like with anything that is perceived to be populist, the scheme has also been widely criticised. Many believe that it will discourage people from working productively as money will be getting easily transferred to their accounts. They believe that the beneficiaries will resort to bad habits instead of being motivated to work.

Due to these arguments, many countries have considered running pilots to check if the scheme is working out for their economy.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow