PASSAGE BASED ON DEMONETISATION

DIRECTION(Q.01-10) Read the following passage carefully and answer the questions given below it.

NOVEMBER 8th was not just the day of Donald Trump’s election. It was also when Indians found out most banknotes would lose all value unless promptly exchanged. Ever since, many have expected their patience in enduring the ensuing chaos to be rewarded in some way. Might scrapped cash unredeemed by presumed tax-dodgers be recycled into a lump-sum payment to each and every citizen? Or would the annual budget, presented on February 1st, be full of giveaways ahead of a string of state elections? In the event, the budget was restrained to the point of dullness. But the government’s closely-watched “economic survey”, released the previous day, hinted at a much bigger giveaway in the works: a universal basic income (UBI) payable to every single Indian.

The idea of a cash payment made to citizens irrespective of their wealth is centuries old. It has become newly fashionable in some rich countries, among both left-wing thinkers (who like its redistributive aspects) and their right-wing foes (who think it results in a less meddlesome state). The idea has had its fans in India: a small UBI scheme was launched as a pilot in the state of Madhya Pradesh in 2010.

Its inclusion in the annual survey, a breeding ground for policies that was drafted by the government’s chief economic adviser, Arvind Subramanian, gives a new focus for fans of the measure (and its opponents). A UBI is usually discussed in abstract terms. There is now a proposed amount: 7,620 rupees ($113) a year. Equivalent to less than a month’s pay at the minimum wage in a city, it is well short of what anyone might need to lead a life of leisure. But it would cut absolute poverty from 22% to less than 0.5%.

Mr Subramanian also provides an outline of how it would be paid for. Crucially, the money would largely come from recycling funds from around 950 existing welfare schemes, including those that offer subsidised food, water, fertiliser and much else besides. Altogether these add up to roughly the 5% of GDP he thinks his version of UBI would cost. Starting such a programme from scratch would take up around half the central government’s annual budget, such is the pitiful state of direct-tax collection in India.

The pros of UBI are clear: India is keen in theory to help its poor, but not very good at it in practice. Much of its welfare subsidies ends up in the hands of the relatively rich, who are more likely to make use of air-conditioned trains or cooking gas—or able to bribe the bureaucrats in charge of deciding who deserves subsidies. In-kind benefits are pilfered by middlemen who would find it harder to get at payments made to beneficiaries’ bank accounts.

Mr Subramanian acknowledges that managing the transition to a new system would be difficult. In much of India, citizens have to travel at least 3km (2 miles) to get to a bank. Digital payments are still a minority pursuit. One advantage of the proliferation of welfare schemes is that if one of them fails to pay out, others might.

Another obstacle is that a fair few billionaires would also benefit from a truly universal UBI. Telling an illiterate farmer that a food-in-kind scheme he has used for decades is being scrapped to finance a programme that will put him on par with Mukesh Ambani, a tycoon who lives in a 27-storey house, will not be a vote-winner. In truth, Mr Subramanian’s proposal stops a little short of true universality: for his sums to add up, take-up must be limited to just 75% of Indians. That means either a return to flawed means-testing, or a hope that the better-off will voluntarily opt out.

Implementing a UBI would be easier in India in one important way: getting the money to recipients. Well over 1bn Indians now have biometric identification cards, known as Aadhaar. The system can handle money, usually by diverting incoming payments to a bank account linked to an Aadhaar number. A blast of cash to all citizens enrolled in the scheme would be a feasible way to distribute the money—though that would mean everyone got money, including the conspicuously rich.

It will take time before 1.3bn Indians receive such a transfer. Keen as Mr Subramanian is, he concludes that UBI is “a powerful idea whose time even if not ripe for implementation is ripe for serious discussion.” For now the government is focused on meeting its long-held 3% deficit target, which it expects to miss by just 0.2 percentage points next year, and on the aftermath of “demonetisation”. But the idea will not go away. It may seem folly in a country home to over a quarter of the world’s truly poor to give people money for nothing. But it would be a swift, efficient way to make it home to far fewer of them.

  1. On the basis of the passage, which of the following is true of the UBI?

(a)  It is India’s self-motivated income scheme fist launched in MP as a pilot project.

(b)  The government’s chief economic adviser, Arvind Subramanian, designed this scheme and is to give a new focus to it.

(c)   The minimum wage in a city is 7,620 rupees ($113) a year.

(d)  7,620 rupees ($113) a year proposed under the UBI is well short of what anyone might need to lead a life of leisure.

(e)  The Chief Economic Advisor was to provide a payment roadmap of the scheme.

  1. Which of the following, on the basis of the passage, is/are incorrect about the UBI?

(a)  Under the UBI the money would primarily goes to recycling funds from around 950 existing welfare schemes, including those that offer subsidised food, water, fertiliser and much else besides.

(b)  The state of direct-tax collection in India is quite downbeat.

(c)   For getting the money to recipients the implementation of a UBI would be easy in India.

(d)  The amount 7,620 rupees ($113) a year proposed under the UBI would cut absolute poverty from 22% to less than 0.5%.

(e)  A UBI is usually discussed in concrete terms.

  1. How, in the context of the passage, will the implementation of the UBI be convenient in India?

(A)  Well over 1bn Indians now have biometric identification cards, known as Aadhaar.

(B)  Technology expansion at an exponential rate has made it easier today to implement it.

(C)  Governmental efforts through the likes of Digital India, Start up India have been quite worthwhile in this facilitation.

(a)  Only A                  (b) All A, B & C  (c) Only A & C

(d)  None                     (e) Only B & C 

  1. What, as per the passage, is/are positive side of the UBI?

(A)  Despite being weak in practice, India, in theory, is passionate about helping its poor.

 (B) Most of the beneficiaries of welfare subsidies in India are well-to-do people for whom the use air-conditioned trains and cooking gas is affordable.

(C)  In-kind benefits are pilfered by middlemen who would find it harder to get at payments made to beneficiaries’ bank accounts.

(a)  All A, B & C         (b) Only A & B   (c) Only A & C

(d)  Only B & C           (e) Only A

  1. What, as per the passage, is/are the obstacles in the way of implementing the UBI?

(A)  Its being universal in nature a fair few billionaires would benefit from the scheme.

(B)  The people that have grown dependent on welfare schemes would not agree to forgo the benefits for a scheme which is intended to bring all citizens on par with the rich and will prove a political setback.

(C)  The proposal for sums to add up, take-up to be limited to just 75% of Indians means either a return to flawed means-testing, or a hope that the better-off will voluntarily opt out.

(a)  Only A & B          (b) Only B & C    (c) Only A & C

(d)  All A, B & C         (e) None

6      Which of the following, on the basis of the passage is/are relevant in respect of cash payment?

(A)  Cash payments made to citizens for centuries has been, somewhat, a symbol of wealth.

(B)  Some rich countries which consider that cash payment is less confusing have started new fancy as cash payment.

(C)  Thinkers of both stream-right wing and left wing- who were earlier hesitant about cash payment have appreciated it recently.

(a)  Only A                  (b) Only A & B   (c) Only B & C

(d)  All A, B & C         (e) None

  1. Which of the following, on the basis of the passage, is/are not a beneficiary of the UBI?

(A)  Some of the billionaires would benefit from a truly universal UBI.

(B)  Since the scheme is universal in nature, NRIs would also be able to benefit from it.

(C)  Instead of removing middlemen from the distribution system, they would be made true beneficiary of the scheme.

(a)  None                     (b) Only B & C    (c) Only A & C

(d)  Only A                  (e) Only A & B

  1. Which of the following sentences, as per the passage, is/are incorrect?

(a)  The funds which are to come from different sources for payment, Subramanian thinks, add up to roughly the 5% of GDP.

(b)  According to the author managing the transition to a new system would be difficult.

(c)   Even today people have to cover considerable distances to get to a bank.

(d)  Digital payments are but a low key affair.

(e)  The proliferation of welfare schemes has provided us with alternatives modes of payment.

  1. November 8th, on the basis of the passage, does not keep importance for which of the following incidents?

(a)  The day of Donald Trump’s election

(b)  The day when demonetisation was announced

(c)   The day when the Prime Minister himself declared the notes of high denominations scrap of paper

(d)  It was when Indians found out most banknotes would lose all value unless promptly exchanged.

(e)  Keeps importance for all the above incidents

  1. Which of the following sentences can best sum up the passage?

(a)  India floats a powerful but infeasible for now idea of a universal basic income

(b)  It takes only 5% of the Indian GDP to reduce its poverty to .5%

(c)   The incumbent government of India’s flagship scheme for poverty alleviation

(d)  Poverty alleviation in India the UBI way

(e)  A little effort and political willpower are needed to make the poverty in India a thing of past

ANSWERS: 1. d 2. e 3. a 4. c 5. d 6. e 7. b 8. e 9. c 10. a 

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