India Could Implement a Quasi-Universal Basic Income Tomorrow If It Wanted To

Cash Transfers To Anyone, Anywhere in a Single Click

There were times in my family's tryst with financial struggle when I, as a teenager, used to think that if a random wealthy individual would just swoop in and give us a certain amount of money to clear our debt, our problems would be solved, and we could start afresh. For the ultra-wealthy individual, it wouldn't mean much, but for us, it would be a lifesaver. There was nothing structurally wrong with our situation, just a poorly planned debt that was slowly but surely draining all assets accumulated up to that point.

That thought has stayed with me. While I may not be in a position to unflinchingly clear debts of the size my family was afflicted with, I can still part with money (that I consider a small amount) and give it to others for whom it could be significant. After all, it is relative.

So, a few years ago, I started my own personal cash-transfer journey. I decided I would give away a certain amount of money in cash each month. But to whom?

I found the practice of evaluating whether a person is needy enough to be an uncomfortable proposition—who am I to judge a competition of misery?

So, I decided on two things: As long as certain criteria were met, I wanted to give the money away randomly without asking (to women, the elderly, small businesses etc). I didn't want to give it to non-profits, as I assumed that population is taken care of by others; I wanted a certain randomness or entropy in the selection process.

A sucker for scale, I thought if only there was a database of all Indians, you could randomly pick one out of a billion, and then send them money. After all, we, the readers of this newsletter, are in the top 1% or less by income in India.

But I can imagine this makes people uncomfortable too: people want to make sure their money has the most impact. If I pick an Indian randomly from the census data, they will be less privileged than I, but are they the most in need?

Aside, for some reason, the accountability we expect from our philanthropic donations doesn't apply when it comes to tax money, public expenditure, and voting, but that's a different topic.

Anyway, so how do I ensure our cash transfer reaches those most in need? In our day-to-day urban life, our face-to-face interactions with people less privileged than us are limited and self-selecting. There needs to be a way to leap beyond the immediate.

Hypothetically, I would want to click anywhere on the map of rural India and be able to select a household and send a cash transfer to them.

Let's say this random point I zoomed into in Jharkhand.

Source: https://maps.app.goo.gl/CtMkZ4FNP4x2UwGd6

Someone residing in the remote hamlet of Ganarbhara in Bishnugarh, Hazaribagh, Jharkhand, could undoubtedly make better use of the money I might otherwise spend on a fancy dinner in South Delhi. There's also a good chance that India's burdened civil society isn't reaching this area, especially given the absence of a paved road. I would, without much hesitation, proceed with a cash transfer, but how?

While identifying a household remotely is possible, I still need a mechanism to transfer money. If it's hard cash, I would need someone to physically deliver the money at a set frequency. If it's digital, I still require bank details for a one-time transfer.

Both methods involve associated costs and, even if feasible for one case, scalability is a concern.

Therefore, we need a readily available database of needy individuals and an inexpensive mechanism for money transfer.

The minimum viable information for this database would include:

• Block, District, etc., to identify underdeveloped areas and Aspirational Districts
• Gender, as cash transfers to women in the household lead to better outcomes for children and nutrition
• Payment Information
• It should be at the population scale, utilizing an existing database because creating a new one at this scale is not feasible. Filtering people from a population database is more fair than building one from scratch for a program, as the latter will have many exclusion errors.

I imagine an online platform where anyone can select an amount to donate via UPI. The system would randomly select a recipient from the database as described above and pair the payment directly to them. The only fees involved would be for payment processing by a third-party, facilitating a pure peer-to-peer transaction. Simple, efficient, and direct.

However, the simplicity of this idea hinges on having a ready database. Creating this database through field surveys, means tests, etc., would compromise its viability at the scale I envision.

My ambition seemed too high until last year when I inadvertently found myself involved in creating such a database. The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), one of the world's largest welfare programs, decided to make the Aadhaar Based Payment System (ABPS) the primary source for wage payments to its beneficiaries.

For those unfamiliar, MGNREGS entitles workers to 100 days of paid work from the government in labor-intensive tasks. The assumption is that only those in dire need would opt for MGNREGS over better-paying jobs. Payments are made directly into bank accounts every 15 days. Last year, ABPS was prioritized and mandated as the method of payment. The idea is to use Aadhaar as a universal bank account number, simplifying the process for both the government and beneficiaries. Once a bank account is linked with Aadhaar, the National Payment Corporation of India stores this information, allowing payments to be made by simply entering the Aadhaar number.

Although theoretically neat, this shift to ABPS had its challenges, including confusion and protests on the ground. Despite these obstacles, as of this writing, 90% of those who have worked under MGNREGS in the last three years are receiving payments through ABPS. That's 129 million people, or about 9% of India's population.

With the database now including gender, geography, and a robust measure of need, MGNREGS could serve as a platform for a quasi-universal basic income (UBI). The government already has the IT infrastructure for bi-weekly payments, with 450 million transactions processed this financial year alone.

However, concerns with this database include the potential for false positives and data contamination if MGNREGS were used for UBI purposes. Additionally, there are still areas unaware of MGNREGS despite its widespread presence.

But having said that, Indian Government has the infrastructure to implement a pretty decent quasi-UBI in a day's notice. For once, I think the technology is in a better position than the policy.

The randomly chosen hamlet in Jharkhand? MGNREGS work has indeed taken place there, indicating the program's potential for facilitating direct cash transfers to those in need.

Would love to know your thoughts! Also, duh - subscribe.

#sarkari started as tongue in cheek tweets which then became a substack newsletter. I plan to cross-post here and there in the future. To know why I started it or read my older posts go to https://www.sarkari.life/about :)