Nobel laureate Abhijit Banerjee’s J-PAL proposes pilot project on universal basic income in Odisha districts
A pilot project based on the concept of inclusive growth dividend (IGD) or universal basic income (UBI), guaranteeing income to poor people is likely to kick off soon in two of the mineral-rich but poor districts of Odisha. Under the project, a monthly transfer of Rs 100 will be made to the bank accounts of each and every person in the targeted areas.
Odisha government officials said the Abdul Latif Jameel Poverty Action Lab (J-PAL) South Asia, co-founded by Nobel Laureates Abhijit Banerjee and Esther Duflo, has proposed a pilot project in Keonjhar, Sundargarh and Mayurbhanj districts of Odisha. Last year, J-PAL South Asia had signed an agreement with the state government to maximise the impact of state’s poverty alleviation programmes across a wide range of sectors.
Under the pilot project, J-PAL has proposed UBI for poor people in around 400 gram panchayats in these districts by ensuring functional bank accounts of each of the adults and crediting Rs 100 to their accounts every month for two years with a budget of Rs 300 crore.
For minor children in each of these panchayats who can’t have bank accounts, the money will be transferred to their mother’s account. As per J-PAL’s assessment, the monthly unconditional income supplement of Rs 100 was assessed after pegging it at 1% of GDP/capita (Odisha’s GSDP/capita estimated to be Rs. 1,16,614 as of 2019-20).
However, government sources said the pilot project can be implemented in only Keonjhar and Sundargarh districts as it can be financed from the District Mineral Fund available there.
Development Commissioner Suresh Mohapatra, who had a preliminary discussion with J-PAL officials last week, said, “Once we get the project report, the DMF trust boards of the two districts would consider it and if found viable then it would be approved. We have suggested to them to include villages within 10 km area of the mining blocks in these districts.”
A Below Poverty Line census conducted by Odisha’s Panchayati Raj department found about 65 per cent of the population in Sundargarh district to be BPL while in Keonjhar 69 per cent of its population is BPL.
J-PAL’s proposal to Odisha government said that IGD may be especially appropriate in the current situation when the aftermath of the economic shutdown to slow the spread of COVID-19 is creating enormous stress on every part of the economy.
“A small regular and predictable income transfer cannot only provide universal social protection, but also be a foundational investment in the broader economic recovery by boosting demand. The Rs 100 a month may be a trivial amount, it would give a large a boost to consumptions to poor households in rural Odisha. The IGD would boost monthly consumption by nearly 20% for the poorest 10% of rural households and would increase monthly consumption for the bottom half of the rural population by l4%,” it said.
While most income transfer schemes are targeted at households, the J-PAL said individual transfers -- where children’s allowances are deposited into the mother’s account -- could be a game changer for female empowerment and intra-household targeting. It can also help in boosting female labour-force participation in Odisha, which at 2l.6 %, is lower than the national average.
The J-PAL in its proposal said the inclusive growth dividend has the potential of delivering on several development goals including progressive poverty reduction without exclusion errors or targeting costs, it can also improve livelihoods through several channels including making it easier for poor households to save and access credit for productive investments.