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Current Affairs 25 March 2019 Digest 4: What is minimum income guarantee scheme; India ranks 76th on Energy Transition Index

Leading opposition party in India has announced a minimum income guarantee scheme for the poorest 20 per cent of Indian families if voted to power. Under the scheme, 20 per cent of India’s most poor families will get Rs 72,000 yearly in their bank accounts.

Mar 25, 2019 16:14 IST
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Story 1- What is minimum income guarantee scheme?

The President of the Indian National Congress, Rahul Gandhi on March 25, 2019 announced a minimum income guarantee scheme for the poorest 20 per cent of Indian families if voted to power.

The announcement was made following the meeting of the Congress Working Committee. The leading opposition party claims that under the scheme, 20 per cent of India’s most poor families will get Rs 72,000 yearly in their bank accounts.

Minimum Income Guarantee Scheme: Key Highlights

The minimum income support proposal will be called ‘nyay’. The scheme aims to bring justice to the poor in the country.

Under the Nyay scheme, the minimum income line will be Rs 12000.

Hence, 20 per cent of the families who earn below Rs 12000 monthly will be given Rs 72000 annually.

The aim is to ensure families a minimum income of Rs 12000 per month.

The money would be directly transferred to bank accounts.

The scheme is expected to directly benefit around 5 crore families and 25 crore people.

The Congress President announced the scheme on a day that the poll process formally took off as candidates for the first round of polling filed their papers. Gandhi claims that there is no such scheme anywhere else in the world and that it is fiscally possible. The party states that they have been studying the scheme for four-five months and all calculations have been done.

The scheme is somewhat similar to the global concept of Universal Basic Income (UBI), which has been implemented in several nations. Following are the key differences between UBI and MIG:

Difference between MIG and UBI

Minimum Income Guarantee

Universal Basic Income

Under this scheme, only 20 per cent of the poorest families will get guaranteed income support.

Under the scheme, every single citizen of a country regardless of social, educational or economic standing gets a guaranteed monthly income.

The minimum income guarantee will be at the discretion of the government of the day. It could be equal, more or less than the poverty line expenditure.

The universal basic income provides a monthly stipend that would ensure that a person would be above the poverty line without any other source of income.

Challenges of Minimum Income Guarantee scheme

While the minimum income guarantee scheme includes not only rural poor but also urban poor, the scheme would be more difficult to implement.

India’s income diversity could perhaps make the implementation even more difficult.

Further, such targeted income support has not been tried anywhere which has the same level of income disparity like India.

Concept of Universal Basic Income in India

UBI was first mentioned in the Economic Survey 2016-17 as a conceptually appealing idea and a possible alternative to social welfare programmes.

The key aim of the concept was to eliminate poverty in the country or within a certain area or state. The initiative involved periodic cash payment unconditionally delivered to all on an individual basis, without means, test or work requirement.

The Economic Survey of India 2016-17 presented the model for providing UBI to the poorer sections of the society.

The poverty line or the estimated minimum level of income needed to sustain life was fixed at Rs 7,620 per person/annum, based on economist Suresh Tendulkar’s poverty line formula.

The survey had estimated that such a model of UBI will cost 4.9 per cent of India’s GDP in comparison to 5.2 per cent of GDP spent on all 950 central sector and centrally sub-sponsored schemes.

Under the scheme, it was decided that the minimum support income would be transferred to the concerned individuals using Aadhaar through direct benefit transfer.

Which countries have implemented minimum income guarantee scheme?

The guaranteed minimum income scheme has been implemented in various forms in countries across the world including Cyprus, France, US, Brazil, Canada.

France was one of the first countries to implement a minimum income, called the Revenu minimum d'insertion in 1988. In 2009, it was turned into Revenu de solidarité active (RSA), a new system that aimed to solve the poverty trap by providing low-wage workers a complementary income to encourage activity.

The United States has multiple social programs that provide guaranteed minimum incomes for individuals meeting certain criteria such as assets or disability.

In 2004, Brazilian President Lula da Silva signed into law a bill to establish a universal basic income.

Canada has also experimented with minimum income trials with the most prominent example being the Mincome experiment, which provided lower income families with cash transfers to keep them out of poverty. However, budget shortfalls resulted in the end of the program.

Story 2- India ranks 76th on WEF Global Energy Transition Index

India has jumped two positions to be ranked 76th on World Economic Forum’s global Energy Transition index. The annual list, released by the Geneva-based forum on March 25, 2019, ranks 115 economies on their ability to balance energy security and access with environmental sustainability and affordability.

Report: Key Findings

Sweden retained its top spot on the list, followed by Switzerland and Norway in the second and third positions respectively.

Among the major economies, the UK is ranked at the 7th position, Singapore at 13th, Germany at 17th, Japan at 18th and the United States at the 27th position.

Australia (43), Canada (35), and Republic of Korea (48) were the only advanced economies with scores below the top quartile on the index, due to the high carbon intensity of their fuel mix and high per capita energy consumption and carbon emissions.

The United States, which is placed at the 27th position, was found to have made progress in reducing the use of coal in power generation. It slipped in the rankings by two places due to concerns surrounding affordability of energy to households and regulatory uncertainty on environmental sustainability

The developing countries in Asia, on the other hand, showed significant improvements towards universal access to electricity led by India (76), Indonesia (63) and Bangladesh (90). Malaysia with 31st spot was the highest-ranking developing country from the region.  Sri Lanka is placed at the 60th rank and Nepal at 93rd.

In Sub-Saharan Africa, Namibia (62) was the highest-ranking country, followed by Kenya (71) and Ethiopia (95). On the other hand, two of the largest consumers of the group -South Africa was ranked 114 and Nigeria 109. Both the nations continue to face challenges in the form of over-reliance on coal and the lack of enabling infrastructure.

In Latin America and the Caribbean region, large economies like Brazil (46) and Mexico (37) from the region did not show improvements, while Colombia (34) and Dominican Republic (78) moved up in the rankings. The region has the highest average scores on the environmental sustainability of all regions, primarily due to its significant hydroelectric capacity.

India’s Rank

India was found to be amongst the countries with high pollution levels and relatively high CO2 intensity in its energy system.

Despite this, the report found that India has made significant strides to improve energy access in recent years and currently scores well in the area of regulation and political commitment towards energy transition.

While India scored low in terms of system performance, it ranked considerably higher when it comes to readiness to adapt to future energy needs.

While India scored low in terms of system performance (ranking 97 and 86, respectively), it ranks considerably higher when it comes to readiness to adapt to future energy needs (45 and 61 respectively). Overall, India has moved up two places from its 78th position in 2018.

India is among the five economies that have managed to improve their rank since last year.

In the BRICS bloc of emerging economies, India was ranked second best, only after Brazil, which with its 46th position globally was top-ranked among them.

Surprisingly, China is ranked even lower than India at the 82nd position, though it ranks very high at seventh place in the world for regulation and political commitment.

Significance

According to the report findings, there was a ground for optimism regarding India despite the current outdated energy system not being ready for the transition because an enabling environment is being built to support the future transition.

Background

According to the World Economic Forum, the global Energy Transition index considers both the current state of the countries' energy system and their structural readiness to adapt to future energy needs.

Small economies were found to have achieved higher scores on readiness with the UK being the only G7 economy in the top 10.

The biggest challenge facing attempts to future proof of global energy is the lack of readiness among the world's largest emitters.

The 10 countries that score the highest in terms of readiness account for a mere 2.6 per cent of global annual emissions.

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