Budget 2017 may include national social security system for poor, unemployed. Here are pros and cons if this gets through

The Indian government is evaluating plans to have a national security system for poor and unemployed in upcoming Budget 2017. The ambitious plan is still at a nascent stage and all pros and cons are being considered.

The government is mulling over income transfer scheme. “There is a thinking... pros and cons of having such a scheme are being examined,” a government official told ET.

Having such a programme can have its repercussions on the economy, especially on fiscal deficit. As per estimates, if the government plans to provide Rs 1,500 every month to an estimated 200 million poor, it will cost the government about Rs 3 lakh crore.

This comes at a time when the government wants to reduce its fiscal deficit to 3% of GDP in FY18.

On the flip side, the national security scheme can be a success, riding on the back of demonetisation and the upcoming rollout of GST.

Some policymakers are confident that Pradhan Mantri Jan Dhan Yojana accounts and the Socio-Economic and Caste Census of 2011 will facilitate a targeted scheme if a universal basic income cannot be provided.

The idea has been gaining ground across the world. Finland recently announced a basic income scheme for anyone seeking employment.

"My personal view is in favour of targeted instead of universal transfers,” Niti Aayog vice-chairman Arvind Panagariya told ET in an interview last month. "With the Socio-Economic and Caste Census, we have a pretty good idea of who the poor are. So we can use the limited fiscal resources more effectively to combat poverty... I lean in favour of a strategy that places a larger volume of cash in the pockets of the poor than the one that gives cash to everyone in smaller amounts,” he had said.