India’s UBI Moment

Published April 22-26, 2020

1

The idea of a Universal Basic Income (UBI) has been there for long. It has been part of a utopian world rich enough to provide a safety net for every citizen via a fixed monthly income so they also have the freedom to do what they want with their time.

It is therefore not surprising that the UBI idea is now making a comeback in the times of economic distress. With the developed world seeing massive economic destruction in the wake of the coronavirus, there have been calls on governments to protect incomes by giving everyone a minimum living wage. Rarely before have we seen incomes for people and revenues for businesses plummet to zero in so short a time. This is truly an extraordinary moment in history.

What is clear is that governments will have to intervene. With the economy under lockdown and production not happening, businesses face the risk of closure. Layoffs have skyrocketed in the US. In India, millions of migrant workers are in detention centres – caught in no man’s land between their workplaces and villages. The government is seen as saviour and omnipotent.

Poorer developing nations like India do not have the financial muscle to risk printing money at massive scale. The inevitable outcome will be some combination of higher fiscal deficits, higher inflation, currency depreciation and increased future taxes. Many countries have tried such approaches in the past with very bad outcomes.

So, what should India do? Is there a way for developing countries like India to do UBI right? Yes!

2

Let me start with some bit of personal history. It was in 2017 that Atanu Dey, a friend who is an economist, first proposed the idea of returning wealth controlled by the government to the people. We had been discussing how to put India on a path to prosperity. We had previously tried two initiatives. One proposed a new Constitution for India that emphasised personal and economic freedom, and constraints on government power. The other was about giving Indian cities greater autonomy via urban governance reforms because cities are where wealth creation happens. We could not get traction for either.

It was then that Atanu wrote a note to me with a simple idea that was not immediately obvious to me – the Indian government controls a lot of wealth which is lying unused, misused and abused, and if this wealth is monetised and returned to the people, it can truly transform their lives and India’s future. Really? How is that possible? Did India have this kind of wealth? India is a poor country, right? But Indians are rich? How is this possible? And the government – why are they not telling us about it?

As I understood the idea, it became clear that it was bold, path-breaking and transformative. Over the next few months, we spent time refining it. I put a team as part of my “Free A Billion” initiative to work to try and estimate India’s public wealth – wealth that belongs to the people but is controlled by the government. This is locked up in minerals, surplus land and the assets of the public sector units (PSUs). As we did the research, the numbers amazed us.

$20 trillion dollars was the estimated wealth under the control of the government. That would approximate come to Rs 1, 50, 00, 00, 00, 00, 00, 000. That’s 15 followed by 14 zeros.   In other words, more than Rs 50 lakh for every Indian family.

Put in simple terms: India is rich, but Indians are poor.

And the secret to doing UBI right for India was to monetise this public wealth and return it to the people in smaller chunks every year – Rs 1,00,000 every year to every family. This would double the annual income for more than half of the families in India.

That was the origin of the Dhan Vapasi (Wealth Return) idea – launched with this video on August 15, 2018.

3

Here is what I said in the Dhan Vapasi launch video in August 2018 – and every word holds true even now 20 months later, with even greater force and urgency now given the economic catastrophe that lies ahead.

Even as rulers change, if the rules remain the same, outcomes will not change. For 71 years, 20 governments and 3 generations of Indian, politicians have stood before us giving solutions for poverty, unemployment and corruption. But little changed. These hamesha problems are still there with us. What India needed was a Nayi Disha, a new direction. It was from this thinking that was born the idea of Dhan Vapasi.

Let’s get back to our questions. Where is our dhan? What is the public wealth of India? This is wealth that is in the public lands, the mineral deposits and the public sector corporations and their assets. We are all shareholders in this wealth. This wealth is not in foreign banks, it is in India – around us. It is not black money, it’s our money. And how much is this wealth? ₹ 1500 lakh crore. That is 15 followed by 14 zeros. This comes to ₹ 50 lakh for every family in India.

India is rich, yet Indians have been kept poor. The median Indian family earns just over ₹ 1 lakh a year – less than ₹ 10,000 per month for a family of five. They save very little, if it all. And that’s what we have to change. That’s why we need our wealth back.

This wealth is under the control of the politicians and bureaucrats. They have stolen our wealth – just like the British rulers did before them. Just look at the luxury in which they live. They have palatial homes, travel in comfort and have massive security – all paid for by our taxes.

The chowkidars have become zameendars.

It is time to stop this theft. It is time to demand our wealth back.

Getting this wealth back means we can choose how to spend it for our family.

What we spend becomes income for the sellers. When we spend on food, it is income for the farmers. When we spend on other goods and services, it helps boost employment and creates jobs. When discretion in political and bureaucratic decision-making in who gets the benefits of various schemes is eliminated, we can end corruption.

Dhan Vapasi is that practical solution which will eliminate the triple evils of poverty, unemployment and corruption. Dhan Vapasi is the universal prosperity revolution that will fulfil the vision the creators of our Constitution had for all Indians – to secure to all citizens freedom, equality and prosperity. Dhan Vapasi is the real freedom to live life on our own terms – without the government as our master, with fellow Indians as partners in progress. Dhan Vapasi is about fairness and justice. Dhan Vapasi is the right of every Indian.

So, how can we get our wealth back? How do we make Dhan Vapasi happen? The politicians and bureaucrats are not going to give our wealth back. Not only have they not told us about this wealth, they continue stealing from us. Dhan Vapasi will need another freedom movement – to free our wealth from the control of the politicians and bureaucrats.

I failed in 2018 to get traction for the Dhan Vapasi idea. It does not mean the idea was wrong. I perhaps erred in how I presented the idea to the people. Or maybe the timing was wrong. Or maybe I mixed up the economic ideas with the desire for political change.

Now that India faces its greatest economic crisis since Independence, it is time for us to revive and revisit the idea. Dhan Vapasi is the right way to do a broader version of universal basic income (UBI) and create hope, jobs, incomes and prosperity for every Indian family.

UBI done this way does not require any added burden on taxpayers (everyone in India). In this sense, the Dhan Vapasi variant of UBI is unique to all other UBI ideas floated around the world.

4

How can we go about making Dhan Vapasi happen?

Developed countries can afford to fund UBI through their reserves, taxes and borrowings. India cannot do that because it will kill off future growth for a very long time. The right way for India to do UBI is to think of it as a universal wealth return funded by public asset monetisation.

I recognise that selling public assets immediately will be difficult and cannot be the first step. Yet, there is a need to get the economic engine of India moving. One way to do this is to borrow $2 trillion from abroad – from sovereign wealth funds and other foreign funds. There are trillions of dollars earning zero to negative interest rates (meaning they pay the banks to hold their funds) around the world. We need to tap into these sources, and promise them 1-2% in positive dollar-based, sovereign-backed returns.

The first trillion dollars can be used to activate the wealth return program. India has about 260 million households. Returning Rs 1 lakh each year to each family means a spending around $330 billion every year. A trillion dollars provides the money to do this for the next three years.

What Dhan Vapasi does is to free up unused resources. It is not printing and distributing money, but about bringing new resources to use.

Money in the hands of people will get the economy moving as they spend on necessities and more. The programme must be universal because there is no time to be wasted in bureaucratically figuring out who is eligible and who is not. Not to mention every Indian has an equal claim on these surplus public assets.

The second trillion dollars should be used to build the infrastructure India so desperately needs – housing, roads, high-speed rail, ports, airports, new cities, healthcare facilities, and so on. The government should make the money available for the private sector to build. This will also get job creation and manufacturing going rapidly and at a large scale. As global enterprises see the opportunity in the Indian market, they will start to move manufacturing to India – starting a process which will create jobs in India and raise Indian workers up the value chain.

In addition, India should cut all taxes to below 10% to become one of the lowest tax in the world. That would leave money in the hands of people. In addition to cutting taxes, the government must implement the structural reforms that so many have written about in the past.

Here are a few additional ideas I had written recently:

  • Focus on the core things that a limited government should do – ensuring rule of law, protect economic freedom, property rights, free markets, free trade, decentralisation, and so on.
  • We have to understand which ideas and policies made rich countries rich, and implement those by embedding them in a new set of rules for India.
  • Government should get out of the way of people. Let trade and voluntary exchange flourish. Let the entrepreneurs take over the task of creating wealth. They will find ways to solve problems.
  • And finally, for all of us: for 10 years, forget about everything that divides us, and let us all unite for a single mission – to rebuild India from the ruins of the virus, to make India the nation it was destined to be, to make every Indian free and prosperous in our lifetime.

As India prospers and grows, the ensuing wealth creation will enable India to repay the $2 trillion in the coming years by monetising the $20 trillion public assets once the economy gets going.

5

As I wrote in my previous series, India is at a crossroads. As a nation, we must choose between two futures – one in which the “Government is Everything”, and the other in which “We, The People, choose our own destiny.” No country which has mortgaged its future to the government has ever become prosperous. People create wealth, not governments. To do that, people need economic freedom, not controls.

Dhan Vapasi – UBI done right – is what can open India to a new future, a Nayi Disha. I don’t think there is any other solution which leads to a happy ending for Indians in our lifetime.

Over the second half of 2018, my team prepared a lot of material that is relevant now and can accelerate the process of Dhan Vapasi.

We had also tried to get traction with the Lok Sabha and Rajya Sabha MPs by sending them the Dhan Vapasi Bill and Report in October 2018. Of course, hardly anyone was interested in putting an end to the loot.

That is why we need to make the demand for Dhan Vapasi into a popular movement. It will be hard to reach out and persuade the masses – all they care about is the outcome, and not the how. But for the middle-class in India, the means matter. If the country is saddled with inflation and higher taxes, it will undo the good work and upward mobility that has been seen since 1991. It will mean that our children will probably have fewer opportunities than we did. The pandemic could lead to a Great Depression which will cause great economic and social upheaval.

That is why we need to start a debate in India on the right way forward. Politicians respond to pressure from the people because they need their support to stay in power. If enough of us come together, we can make change happen and ensure that 2020 will forever be remembered as the year India attained Sampoorna Swatantrata (Complete Freedom). Or, it will be a missed opportunity like 1947. The choice is ours to make.