Government should not dip in to RBI's reserves to fund UBI scheme, says former CEA Arvind Subramanian

Calling for a rationalisation of subsidies, former Chief Economic Adviser (CEA) Arvind Subramanian said the government should not dip in to the reserves of Reserve Bank of India (RBI) to fund the universal basic income scheme

"At this stage we should not add to the fiscal deficit either at the centre or the states and also we should find permanent financing not one-off financing like RBI resources," Subramanian told CNBC-TV18.

"If you look at the agricultural budget, of course, it will require political will but I think the resources are there to finance the initial Rs 84,000, the central government should provide," Subramanian added.

With three months to go for the Lok Sabha elections Congress president Rahul Gandhi has promised a minimum income guarantee for the poor if voted to power. Many believe this is a pre-emptive strike as the government is also working on an income scheme of its own. Meanwhile, the former CEA has proposed an income support scheme.

This scheme proposes to transfer Rs 18,000 per year to each rural household, he said. Subramanian has pegged the cost of this scheme at 1.3 percent of GDP with a total outlay of Rs 2.64 lakh crore.

The current agrarian crisis presents a political opportunity for a quasi-universal basic income across rural India, he added.