Basic Income: transforming lives in rural India

An experiment in paying villagers in some of India’s poorest villages a modest regular cash payment without conditions has transformed their lives. It could provide an effective anti-poverty programme for all India’s poor. But which way will Narendra Modi jump?

Stuart Weir
20 June 2014

The idea of basic income raises issues far away from Madhya Pradesh in India. Historically, figures such as Bertrand Russell, Andre Gorz, Martin Luther King, and J K Galbraith all came out in favour of a basic income. Arguably, basic income was a desirable reform in the north and south during the 1970s and 1980s that has now become vital since the 2008 financial crisis to bring stability and dignity to a new class of workers, created by the demands of global capitalism, whose lives across the world, are lived in a state of chronic insecurity, shifting between intermittent worklessness and insecure jobs for uncertain wages in a neo-liberal ‘flexible’ market. For them the post-1945 world of social democracy, secure employment and social benefits is past recovery. 

In the UK, the Green Party has adopted basic income, or “citizen’s income”, as party policy.  In Scotland, the Jimmy Reid Foundation has issued a report, In Place of Anxiety, arguing for a citizen’s income scheme to provide a new form of social security “for the Common Weal”.  Given the reactionary public response to the benefit system, and state beneficiaries, it seems highly unlikely that a labourist Labour Party, already on the defensive on welfare, would have the courage to promote such an idea in the UK.  Here, conditionality is the enemy in our deteriorating welfare system, corrupted and warped, not as in India, but by cutbacks in benefits and the aggregation of punitive conditions, sanctions that drive claimants to food banks, and biased tests of disability, all driven along in public by a vicious demonising of claimants.

There are basic income groups and movements in many countries. The idea is simmering below the surface of conventional political thinking and policy-making across Europe, South America and most of the world. It has actually broken the surface in Switzerland where there is to be a referendum on whether to introduce it. Basic income has proved itself in pilot schemes, in Canada and Namibia as well as in India, but government in both the former countries is hostile. There is some activity on the ground. The idea is most advanced in Brazil where Bolsa Familia (‘family bowl’), a universal basic income scheme became law in 2004 and is being introduced in stages. Bolsa Familia has since dramatically reduced poverty where it applies. Inevitably, Bolsa Familia has been denounced for encouraging laziness, but the World Bank has surveyed the scheme and found that it did not discourage working, and even encouraged harder work and entrepreneurship.

Case-study: Madhya Pradesh, India

The world’s worst poverty, hunger and malnutrition are to be found in India, with two thirds of the 1.2 billion population living in poverty and half the children suffering from malnutrition.

Ghodakhurd and Jagmal Pipalya are two isolated villages in Madhya Pradesh, one of the poorest states in India where child malnutrition and death from diarrhoeal disease are rife. The poor inhabitants of both villages participated in a bold social experiment over 12-17 months in 2011-13 that transformed their individual and communal lives. All the adults in the two villages, and another seven local villages, received a regular ‘basic income’, varying between 200 or 300 rupees (£2 to £3) every month, regardless of their wages, other benefits, subsidised public welfare, employment, caste, gender , age or number of children (who received 100 rupees, paid to their mothers). The grants were deliberately modest, as they were designed to act as a secure base for people’s livelihoods only.

A final report on this Unicef-funded experiment with basic income is to be published at a major conference in Delhi in December 2014. (A popular summary is also to be published, in Hindi and in English.) But it is already clear that a national basic income scheme could transform the situation of the poor across India, and significantly change India’s traditional approach to relieving poverty.

SEWA, the Self-Employed Women’s Association, a remarkable trade union cum co-operative organisation of 1.2 million members, which is based largely in Gujarat and Madhya Pradesh, ran and organised the experimental scheme. SEWA organises vulnerable women workers in the informal economy and organises co-operative enterprises, including a bank, savings clubs, etc. Farm workers, street vendors, brick kiln labourers, home workers (specifically in Madhya Pradesh, women who pick tendu leaves for the cheap roll-up bidi cigarettes they also make), and other marginal workers make up its membership.  SEWA is so unconventional a trade union that other trade unions in India ganged up against it and tried to deny it recognition.

The unconditional nature of the cash benefit was the key to its success. Sarath Davala, SEWA’s research coordinator of the basic income scheme, has worked closely with the trade union’s village organisers and villagers. He explains that India’s ramshackle anti-poverty system fails to reach the poorest people in the informal economy where SEWA works.This failure is officially recognised: India’s Planning Commission calculates that the huge spending programme only reaches just over one in four poor people.

Davala says that there are 321 social protection schemes in Madhya Pradesh, mostly in subsidies and in kind, for the distribution of food, kerosene, grain, pulses, paid work, gas, latrines, all of which are subject to strict conditionalities regarding gender, caste, ethnicity, age, occupation, number of children: 

“The rules the bureaucracy imposes are very hard for people to meet. It is very difficult if you are illiterate. People have to prove a whole range of things, even where they live, to get entitlement to benefits,” he says. “Conditionality means intermediaries and intermediaries mean corruption. Officials take their cut - out of food, bricks, everything –and, as the villagers say, ‘they drop our papers in a corner’. Unconditional cash benefits cut through the system, they free people and give them control and dignity; and the savings from the heavy bureaucratic regime could be ploughed back into a more generous cash payment scheme.”

I saw and heard evidence of the corruption and inefficiency of the official social protection schemes on my visits to Ghodakhurd and Jagmal Pipalya. I saw and heard, too, evidence of the way the modest cash transfers not only gave people more control over their lives, but also freed them, temporarily at least, from the rentier economy, loans from exploitative landlords and employers, and from the indebtedness that resulted.  After communal prayers, SEWA women organisers, sitting on cushions around a carpeted room at SEWA’s local office, confirmed what I had seen and heard and explained just how basic income payments had transformed village life. “Before, some of the men used to sit around and play cards under the Banyan tree in the centre of the village,” says Rajmani, who is a senior SEWA leader. “They began buying seeds and fertilisers with the money and the card players disappeared.”  (The village centre is called Choupal; there is a paved sitting place below the tree.)

Villagers were able to spend the money as they saw fit. But most of them used the cash grants for renewing their houses and building latrines, 18 new ones in all; stocking up and bulk buying food supplies; paying school fees and sending their children to school in uniform; investing in seeds and pesticides, goats and oxen, and at least one Jersey cow – which led to a significant shift from paid labour to self-cultivation; buying sewing machines for “own account” businesses making blouses, petticoats; treating unaddressed illnesses, such as TB and blindness, and remedying injuries. Often they pooled the extra cash, for example, to buy a communal television set, to repair the spire of their temple, to create a credit union or a loan fund for weddings (which are expensive throughout Indian society).

I asked the village organisers whether villagers wasted the cash benefits on drink perhaps or saris and jewellery. Unanimously they shook their heads. Bhanumatie Rimjha said: 

“Everyone, all the official people, had to laugh at the idea of giving poor people money. They said, ‘The poor are irresponsible, they don’t know what to do with money, they are unbankable, they can’t manage bank accounts. The whole idea is crazy.’  Even we were sometimes unsure, but we were really surprised each time that we had a story to tell.  This is our story: poor people are responsible for themselves and their families. It is prejudice that they will drink it all away.  We have learned that we can always trust the poor”. Later, an elderly woman villager said philosophically, “The fools have remained foolish, but the wise ones have made good use of the money for their work”.

The cash transfers, paid through bank accounts organised by SEWA, also made a difference in the position of women in the villages. In the villages a form of Hindu purdah exists for the married women in the presence of older male in-laws or in local public spaces. But the distribution of cash transfers on an equal basis, with the women also responsible for children’s benefits, brought them into communal village affairs, sitting in places previously occupied exclusively by men (as in Choupal).  Because the payments are equal, they are also able to make spending decisions on their own account.

Sarath believes that SEWA’s work over time with child centres, savings groups, additional loans and so on, have contributed to the resilience and good sense of the villagers; and as SEWA works with the women on village activities, they are additionally empowered.   The village organisers told me that the castes don’t normally “come together”, but the women of different castes in the villages did come together, for animal husbandry, buying cows and livestock, other financial and other training and SEWA meetings. Further, the benefits reduced migration to the towns, more villagers have stayed on to work on their small farms.

The cupboard is bare

We reach Ghodakhurd, bumping and lurching along an uneven dust track that runs through fields of wheat and garlic bushes.  We stop to talk to women in bright saris who are picking the garlic.  By the side of the track shiny motor cycles are parked in clumps where a congregation of villagers are celebrating a young man’s departure for the army.  The modern bikes gleam in the hot sun; the heat feels almost solid.  The villagers here are Bhils, classified under British rule as ‘aboriginals’, and now under India’s policy of positive discrimination, as a ‘scheduled tribe’.

We are a small party -  Sarath;  two of Sewa’s village organisers; Guy Standing from SOAS, a passionate advocate of basic income and the author of The Precariat and a follow-up book, A Precariat Charter; SEWA researcher Pratik; a photographer, and me. Standing, who is directing the research programme for the project, is here to interview villagers for a final word on the impact of the cash transfers.  We go from one surprisingly commodious mud and straw house to another, divans of wood and jute are dragged out onto fore-courts for us to sit on, sometimes under verandas. Grain is spread in front of houses over sacking; a family of goats of all sizes wander across one yard.  “BIGs,” says Guy, “basic income goats. There were hardly any goats before the cash transfers, but they have been a good investment, now the population of goats has gone up by three times.”

Rajoribai, the first woman we talk to, has bought an axe and goats with her transfer money, but most of it has gone on steroids and other medicines to treat her paralysis and swollen legs. Chickens and chicks scuttle about, some chicks are pink, having been sprayed during Holi, the religious festival of colours when people play, chase and colour each other. (I notice that Pratik’s hands are pink too.)

Poor as she is, Rajoribai has no poverty card - the official pass to the official subsistence handouts - and so she has borrowed seed from the landlord.  At harvest time, she has to pay to use the threshing machine and pay the landlord back with twice as much grain. Her three sons are naukars, effectively poorly-paid bonded labourers, who work at the brick kiln.  Her neighbour shows us his poverty card, a dog-eared booklet with official scrawls all over it.  For five months officials at the food store told him they had no stock, and then that he hadn’t come at the right time. He has his own small-holding and worked also as a casual labourer at the local brick kiln. He invested his basic income grants in seeds and pesticide and worked his land. His harvest was good – 22 ‘quintals’ (100 kilo sacks), more than double the usual crop. Does he want the basic income scheme to return? He puts his hands together in silent prayer – and explains that with basic income he had the cash in hand to buy fertiliser and pesticides at the right time; previously, he had to wait for the landlord finally to give him a loan, a wait that disrupted his crop schedule.

The village school empties at lunch-time. Teenage girls in bright blue uniforms play chase, sprinting, laughing, tagging each other, over ground that passes for the village square, a thin tree stump serves as ‘home’. Up the path, two small boys play petanque with three marbles in the dust. We talk to Ghodakhurd’s sarpanch, the elected village head, who serves as the link man between villagers and officialdom. He was against the basic income scheme at first; now he acknowledges that it has benefited the village. As we leave, the village food store is closed. Guy and I peer through gaps in the food store wall. Like Old Mother Hubbard’s cupboard, the capacious well-swept interior is bare.  

In Jagmal Pipalya the previous day the sheer inadequacy of the government’s social protection scheme was made even more evident. Once again, women are cropping the wheat by hand, though I see a tractor in the distance. The corrugated iron or tiled roofs of the houses here are heavily covered with logs and stones, I assume as protection against the monsoon wind and rains that cut these villages off for four months a year. There are 25 households in this subcolony of the village, known by the villagers as the Harijan Basti, and populated by former ‘untouchables’, now all classified as a ‘scheduled caste’ under the Indian constitution.   We sit on divans and a crowd gathers. One man shows off a latrine he built for himself; his neighbour shows us a collapsed latrine. Officials simply gave him insufficient bricks and cement, and kept the remainder; the rain did the rest. The bricks and rubble over the basin are the remains of the government’s Total Sanitation Programme.

We talk to Sajanbai, a destitute 70-year-old widow whose sons have left. She is kept by her neighbours with an occasional contribution from a son. In the monsoon season, she slipped and broke her leg. The village was cut off and she spent two days on her own. Some neighbours took her to hospital for treatment that cost the best part of 6,000 rupees, which she began paying off from her basic income grants and savings. She has been refused the poverty card. 


Then I learn that about 70 people from the sub-colony had applied for poverty cards. Only four were granted. Kamla Chouhan, the SEWA organiser, tells me that the 70 people are all “extremely poor” and SEWA staff found that those refused cards were all eligible; “they filled in the forms, but they were refused. They don’t know why. They need photos, finger prints, too many things”. She went to the panchayat, the local government office in another village, on their behalf. The officials are still considering their applications. Here for sure, the Planning Commission’s estimate is wildly generous.

Measuring the impact of basic income

The basic income experiment was backed by a major research programme, involving 93 staff  in all. Twelve non-participant villages, or controls, in the area were studied alongside the cash transfer villages to provide comparative statistics. Detailed studies took place in all the villages at the beginning, mid-point and end of the project. While I was in Madhya Pradesh, the nucleus of the study team held a final “wrap” meeting to prepare for the final report that Unicef, will publish in December, as well as for the briefer, more popular book. Renana Jhabvala, SEWA’s national co-ordinator, and Guy Standing, who is the de facto director of the background research, shared the direction of the meeting.

Some preliminary results have been made known. The figures bear out the conclusions that Guy, Renana and the team had reached - that far from encouraging laziness, the cash transfers have brought “more work, more productivity”, largely because they have inspired more “own account” farm and other working opportunities as an alternative to wage labour. Over one in five of the basic income villages increased their work activities, twice as many as in the control villages, and most of the villagers attributed the new farm or new business activity to the provision of the grants. Basic income villagers increased their livestock by 70 per cent  Sarath says: “So basic income is not only a welfare story, it is a growth story too – inclusive and bottom-up growth that has stimulated the local economy.”

In two areas vital for India’s poor children, basic income brought palpable benefits to the villages. One in three malnourished children in the world live in India, and over two-fifths of these children are underweight. Nine in ten children in the poorest Indian families are illiterate, even though they have apparently spent four years in school: the cause is absenteeism. On malnutrition, tests using the WHO’s z-score index found that the cash grants to village families were associated with improved weight-for-age among children, with the main effect being among young girls. On school attendance and performance, there was a dramatic improvement, thanks to the additional expenditure on school uniforms, fees, school bags, bicycles, stationery. Nearly two thirds more children, neatly dressed, who had grazed cattle and worked the fields and who “previously were dirty”, began to go to school from the cash transfer villages; the comparative figure for the control villages were 22 per cent. Their performance in school rose by 68 per cent from cash transfer villages, 36 per cent from control villages. Girls who previously “sat at home” began going to school from the study villages. According to a You Tube film for the project; “twelve girls enrolled in the ninth standard and they go the 4 km there and back to school.”

There was a 10 per cent increase in spending on dwellings, better water supply from tube wells and better lighting; measurable improvements in the quality and quantity of food with varied diets and more fruit and vegetables – which also led to improved health, especially in the tribal villages. There was a rise of nearly 50 per cent spending on medical treatment and medicines. And significantly, there was 13.4 per cent less anxiety among basic income villages.

What are the prospects for basic income in India ?

The triumph of Narendra Modi, a neo-liberal authoritarian, in India’s recent general election, casts a shadow over the future of provision for the country’s poor. The two flagship anti-poverty schemes initiated by the previous United Progressive Alliance coalition are the Mahatma Gandhi Rural Employment Guarantee Scheme and the Food Security Act which was supposed to deliver subsidised food to nearly two-thirds of the population. Modi is already committed to unravelling the whole anti-poverty system which, as we have seen, is  costly, paternalistic and corrupted. What seems certain is that he will be looking for cuts, and because the anti-poverty programme is associated with the Congress regime, that he is likely to subvert it. But otherwise it is far from clear what he will do; whether direct cash transfers will play a role under his government; and what that role might be.

There is a clear danger that he might very well abuse the basic income idea in his effort to develop a cheaper alternative to the existing bureaucratic system. It is not as though the idea of direct cash transfers is anathema to neo-liberals (Hayek was for example attracted to the idea). Nor is such a proposal entirely off the radar. In November 2012 the federal government, under Manmohan Singh, announced an overhaul of aid programmes, under the title of Direct Benefit Transfers, and began to implement a switch from fuel subsidies and other routine schemes, such as education scholarships, to cash payments. That attempt withered on the ground, and made SEWA’s pilot scheme controversial, as people feared that it could be a harbinger of the abolition of state aid, rather than a complementary measure. India’s old left has defended the subsidies and rural labourism of the anti-poverty regime and fears that if Modi opts for cash transfers it will be as part of a strategy to privatise social services.

Guy Standing asserts that social services must be seen separately because in India, like anywhere else, social services must be public if they are to be universal and good. On balance, he thinks that Modi’s BJP will move towards cash transfers. “The question is, whether or not they will be narrowly targeted, and whether or not they will be conditional”.

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