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After opening the day on a positive note, the Indian stock markets have added to their early gains. Sectoral indices are trading on a positive note with stocks from the banking and auto sectors leading the gains.
The BSE Sensex is trading up 284 points (up 1%) and the NSE Nifty is trading up 86 points (up 1%). The BSE Mid Cap index is trading up by 1.3%, while the BSE Small Cap index is trading up 0.8%. The rupee is trading at 66.56 to the US$.
As per an article in the Economic Times, India's Chief Economic Advisor Arvind Subramanian stated that Universal Basic Income (UBI) could feature in the next economic survey. Subramanian said that the idea of UBI is gaining a lot of resonance all over the world, especially in India. He further said that UBI is going to be one of the big topics to be addressed in the next economic survey.
When asked if India was ready for such an idea, he said that the answer to whether or not we would have a UBI could well be a yes, but under certain conditions.
The idea of UBI is gaining lot of attention of late. And citizens of many countries across the globe are still arguing for it. The recent case was of the Swiss. They casted their votes and registered their opinions on the idea of UBI. 'No', they said. Voters rejected the proposal 77% to 23% because of its prohibitive cost and implicit reward for idleness.
So can a minimum guaranteed income for India solve the troubles?
As far as our views go, we believe India needs a reform on the inequality front and not the income front. No doubt that an additional dole of money in hand will make Indians richer. But that alone can't shift the progress curve. It would be just the beginning of the end. This we say is because India's net 'Gini index of inequality' - based on income net of taxes and transfers - stood at 51.36 in 2013. This was as against 45.18 recorded in 1990. This records as one of the highest levels of inequality in the Asia-Pacific region.
And this rise in income inequality is due to the lack of access to opportunity for the poor. Not every Indian has access to basic factors such as education and employment. Other factors include the capture of subsidies by the rich, skewed distribution of wealth, and the rural-urban income gap. And as a result, the income divide has just become more pronounced. If treated with scant importance, this can pose many problems ahead. In fact, India's most valuable asset, the youth, could become one of its biggest liability if this gap keeps growing.
And the scary part is that the problem of inequality is just one part of the puzzle that remains a concern for the Indian economy. Vivek Kaul, editor of Vivek Kaul's Diary, has just launched the Vivek Kaul Letter which outlines some serious threats that lie ahead for the Indian economy.
In another news update, Urjit Patel has assumed charge as the 24th governor of the Reserve Bank of India (RBI) after a private handover from Raghuram Rajan.
Ministers and top bureaucrats expect Urjit Patel to maintain a balance between inflation and growth. He is expected to use his experience of handling monetary policy at the RBI to deliver on this front.
That said, challenges remain. The biggest of all is inflation. Vivek Kaul, in one of his articles from the Vivek Kaul's Diary, explained what we can expect from the new RBI governor. He stressed that, with inflation levels at nearly a two-year high, it is important to continue to contain inflation. In a slightly different vein, Richa Agarwal, Research Analyst at Equitymaster, offered some questions that lie ahead for Urjit Patel's mandate.
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