Chief Economic Advisor (CEA) V Anantha Nageswaran rejected the concept of Universal Socia Security on Friday. He said it will create a ground for “perverse incentives” for people and dissuade them from searching for income-generating opportunities. Nageswaran added that the universal basic income scheme should not be on the agenda for developing nations like India which need to focus on economic growth to fulfil people’s aspirations, according to PTI report.
"For our country, when natural economic growth should take care of many of the aspirations, it (Universal Social Security) may not be necessary. We may be creating the ground for perverse incentives for people to not make their effort in seeking such opportunities. So therefore, Universal Social Security for India is not something that should be on the agenda in the near term," he said, reported PTI.
Nageswaran said, "Support should be confined to those who may not be able to participate in the economic activities and bring them up to a point where they can meaningfully engage in the economy."
The concept of Universal Social Security was first introduced by the former CEA Arvind Subramanian in his first economic survey. The proposal generated cross sections of opinions.
In 2016-17, Subramanian proposed the idea of universal basic income (UBI) for a universal stipend to every adult and child, poor or rich.
The government has never been an advocate of big fiscal interventions or across-the-board fiscal stimulus. On the other hand, they have increased capital expenditure to support the economy and generate employment opportunities.
According to Nageswaran, the government should ensure that its financial health remains stable and the union government continues to focus on limiting the fiscal deficit to 4.5% by the financial year 2025-26, reported PTI.
He said the lower fiscal deficit will help in reducing interest rates not only for the government but for consumers also.
The CEA also said that unlike last decade and its major financial and economic fallouts, the Indian economy will not overheat and sustain the growth momentum for a much longer duration.