Tamil Nadu’s Rs 1,000 scheme for women marks larger trend toward Universal Basic Income

It is for the first time that a big state like Tamil Nadu, with a relatively large per capita income, has decided to expand the scope of basic income criteria

basic income scheme, UBI, direct cash transfers, welfare scheme, Tamil Nadu, Punjab, DMK, AAP, Puducherry, public sector, private sector, women beneficiaries, mid-day meal, Nyay, PM-Kisan
The preference of women over men in direct cash transfer schemes is to ensure more accountability and efficiency of the money so transferred. Representational image: iStock

Tamil Nadu on Monday took a major leap in implementing the concept of ‘Targeted Basic Income’ by announcing a ₹1,000 per month income support to ‘eligible’ women family heads in the state.

State Finance Minister Palanivel Thiaga Rajan, popularly known as PTR, while presenting the 2023-24 budget, allotted ₹7,000 crore for the scheme which will be launched on September 15, marking the birthday of DMK founder CN Annadurai. It is, therefore, fair to assume that the allocation is for the seven-month period up to March 2024.

The scheme is likely to benefit 80 lakh women in the state, which has a total population of 8.5 crores. The DMK’s 2021 election manifesto had spoken of providing ₹1,000 to the ‘head’ women of all families. The Opposition is now holding it against Chief Minister MK Stalin for the partial implementation, as the announcement talks of ‘eligibility’.

Also read: Tamil Nadu Budget: PTR walks the tightrope on fiscal discipline and welfare schemes

AAP leader Arvind Kejriwal had announced a similar scheme for Punjab, where all women above the age of 18 were to be covered. It is yet to be implemented, possibly because of the huge drain it may cause on the state’s exchequer. This was also AAP’s major poll plank during its Gujarat assembly outing. Puducherry, neighbouring Tamil Nadu, is already implementing a ₹ 1,000 per month cash transfer scheme for women family heads, but Tamil Nadu would be the first big state to do so.

Debate over Universal Basic Income

The concept of Universal Basic Income, or UBI, was widely discussed in the run-up to the 2019 parliamentary elections when Congress party made it part of its poll manifesto. It talked of a scheme termed Nyay, where it would give nyunatam, or minimum income support, to 5 crore families constituting the poorest 20 per cent of the population. 

Also read: Why Cong’s universal basic income promise in Kerala is not far-fetched

The idea of the scheme was to take the nation towards the goal of abolition of poverty. This came on the back of Congress party’s claim that it had liberated 14 crore people out of poverty between 2004 and 2014, during its regime. The scheme promised a guaranteed transfer of ₹72,000 to eligible families each year. It also promised to transfer money ‘as far as possible to the women of the family’.

However, Prime Minister Narendra Modi stole the march by quickly announcing the PM Kisan Scheme, which was implemented from 2018 itself. The scheme provides a ‘targeted basic income’ of ₹6,000 a year in three instalments to eligible farmers.

PM-Kisan has an elaborate ‘scheme exclusion’ criteria which keeps out all institutional land holders, farmer families belonging to elected representatives, serving or retired officials, professionals such as doctors, engineers, lawyers, etc., and anyone who had paid income tax in the previous assessment year.

Expanding basic income criteria

India has been gradually expanding its targeted basic income criteria. But this is for the first time that a medium-size state, such as Tamil Nadu, with a relatively large per capita income, has decided to expand its scope, perhaps taking it closer to the concept of UBI.

There has been significant conversation over the concept of UBI in developing nations, and it is essential especially for India, which has no formal safety net for its workers, most of whom are outside the formal sector of the economy.

Tamil Nadu has been experimenting for a while with social welfare programmes, ranging from providing television sets, goats, cows and monthly rations to adult citizens to free laptops and cycles to school-going children. It has also implemented successful mid-day meal schemes and effective health insurance programmes.

Some of the schemes have been major hits, that not only provided substantial economic relief to distressed sections of the population but also improved several social indicators of the state, such as gross enrolment ratios, birth and death rates and life expectancy, bringing them at par with developed nations.

Also watch: Top 5 schemes announced in Tamil Nadu Budget

Tamil Nadu, like many other states, has also experimented with targeted money transfers to schoolchildren as subsidies to enable them buy uniforms, books and stationary. The Centre has tried improving the working condition of women in a kitchen by providing cooking gas connections in the form of subsidies. The schemes have been expanding as identification and payments to individuals — with the help of Aadhar and Unified Payment Interface (UPI) — have revolutionised their effective implementation.

Direct cash transfers

The philosophy behind moving away from welfare schemes to direct cash transfers is to give freedom to the end user; by not being a nanny state that makes decisions for its people that they might otherwise make for themselves. Further, the involvement of women, or the homemakers, is preferred over men to ensure more accountability and efficiency of the money so transferred.

Also read: India’s deployment of direct cash transfer scheme a logistical marvel: IMF

The larger question is whether the move would lead to the state vacating its role as a provider of social services and making way for the private sector to fill in the gap. 

By ensuring direct cash transfer, the state, for example, need not invest in welfare infrastructure. For instance, it need not set up ration shops, buy and store commodities such as wheat or sugar and invite criticism over public sector inefficiencies. The end user could use a shiny private bus for transport or visit a mall for buying essentials using the money.

The role of private sector

But this leads to the next question — can a state rely so much on the private sector whose primary objective is profit earning? Though private companies have Corporate Social Responsibilities, or CSR, it is not enough to take care of a state’s complete requirements. And ultimately, in a crunch situation, it is the public sector that steps in, which was seen demonstrably during the pandemic or the Ukraine war.

It was Air India’s Vande Bharat flights that flew round-the-clock to bring in Indian visitors from foreign locations during the pandemic lockdowns; people fell back upon government hospitals for Covid treatments and replenishment of milk, bread and other essential supplies. These could be termed as exceptional circumstances, but in normal times institutions such as NAFED and FCI lend a helping hand to the government to cool down rising prices and avert runaway inflation.

This brings us to the need for robust regulatory bodies which the government may use to step in to take control in difficult situations. Some of these are transitory issues as the society matures with the economy, moving from a developing to a developed state. This, clearly, is not a promotion of revadi or freebies culture.