The International Monetary Fund has said the decision whether to ponder a Universal Basic Income (UBI) or opt to go in a completely different direction solely depends on the social and political preferences in India.
Stressing that its recent Fiscal Monitor did not advocate for or against the UBI, the IMF has said the report found that the UBI has potential to have a significant impact on inequality and poverty, as it covers all individuals at the bottom of the income distribution.
“But it is costly,” it said in a statement, adding that the purpose of the research in the Fiscal Monitor was to contribute to a debate on how fiscal policy could help address the problem of inequality, looking at concepts such as progressivity of taxation, spending on health and education, and UBI.
The Fiscal Monitor, which was released during the Annual Meetings of the IMF earlier this month, used India as an example and the schemes that were in place in the country in 2011.
“The analysis in the report, however, did not take into account the considerable subsidy reforms undertaken in India in recent years,” it said.
The Fiscal Monitor report has highlighted the growing inequality in the global economy as well as within countries and has also discussed how fiscal policies can help achieve redistributive objectives. Apart from UBI, it had focussed on two other policy debates -- tax rates at the top of the income distribution and the role of public spending on education and health.
“What we do in the Fiscal Monitor is an experience that I think is very enlightening. We use India as an example, and we use the schemes that were in place in India around 2011,” Vitor Gaspar, Director of the Fiscal Affairs Department, IMF had said when the report was released.