”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 own 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,” said Chief Economic Advisor (CEA) V Anantha Nageswaran
Lucknow:
Chief Economic Advisor (CEA) V Anantha Nageswaran on Friday dismissed the idea of Universal Social Security, saying it will create a ground for ”perverse incentives” for people and dissuade them from seeking income-generating opportunities.
He said the concept of Universal Social Security is not favourable for developing countries like India which need to focus on economic growth to take care of the aspirations of its people.
”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 own 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 at an event here.
However, he said, support should be confined to those who may not be able to participate in economic activities and bring them up to a point where they can meaningfully engage in the economy.
India has not reached the stage where it is a moral or economic necessity to have Universal Social Security, he added.
It is to be noted that former Chief Economic Advisor Arvind Subramanian during the first term of the Narendra Modi government had mooted the idea of a uniform stipend to citizens.
Subramanian in the Economic Survey 2016-17 had proposed the idea of universal basic income (UBI) or a uniform stipend to every adult and child, poor or rich.
The survey said UBI would guarantee all citizens enough income to cover their basic needs and would be easier to administer than the current anti-poverty schemes, which are plagued by waste, corruption and abuse.
Sharing his optimism on the medium-term growth prospects of the Indian economy, he said that the sound macroeconomic policies of the government, structural reforms, such as GST, IBC etc, thrust on infrastructure and digitalisation, have ensured that the Indian economy can grow for a longer period without running into overheating problems.
On capex, he said that the private sector is poised to attain stronger investment growth following the strengthening of corporate balance sheets, and stronger bank balance sheets, which has improved their ability to lend and support from the government’s capex push.
Over the medium term, investments will remain a key driver of growth. The uptick in investments will drive the manufacturing output too, he said at the CII event here.
Private consumption, which contributes close to 60 per cent to GDP, has surpassed the pre-pandemic trend in the third quarter of last fiscal contributed by the release of pent-up demand and recovery in rural demand, he said.
Going ahead, he said, a lower inflation outlook due to easing commodity prices, good harvest and pass-through of lower input costs, will have a salutary impact on boosting the consumption spending further this fiscal.