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IMF not endorsing universal basic income over PDS in India: Official

Reports emerged after IMF said in its annual report that UBI will outperform the PDS in terms of coverage, progressivity, and generosity

Press Trust of India  |  Washington 

Visitors are silhouetted against the logo of the International Monetary Fund
Visitors are silhouetted against the logo of the International Monetary Fund

The International Monetary Fund (IMF) on Saturday shot down media reports speculating that it was pushing for the (PDS) to be replaced by the (UBI) in India.

The reports emerged in a section of media after the IMF, in its annual Fiscal Monitor report, said the will outperform the in terms of coverage, progressivity, and generosity.

The IMF's observation was based on the results of a microsimulation analysis of a policy reform that replaces food and fuel subsidies in India with a

Director of Fiscal Affairs Department of the IMF, Vitor Gaspar, said the report on India was just a case study on and was carried out in order to demonstrate as to how a large but inefficient scheme can be replaced.

"We don't regard Fiscal Monitor as advocating for or against This is not the case at all," Gaspar said in an interview.

"No! The goal was not to advocate It was to use the as an illustration of how one could replace existing large and macro economically significant schemes that are inefficient and inequitable," he said.

The top official said their report was based on the set of subsidy schemes, including energy subsidies and schemes, that existed in India around 2011.

"We looked at these subsidies and we documented how a reform that would consider the replacement of these subsidies by the would look like; then, we show that from 2011 to now, India has changed a lot," Gaspar explained.

"Hence the example that we present does not apply to the India of today. Today's India is a completely different place than what it was in 2011," the top official said.

Gaspar said the opted for India as a case study mainly because the is particularly attractive when it replaces inefficient and inequitable public spending programs.

"And it turned out that the subsidy schemes that prevailed in India in 2011 were indeed inefficient and inequitable. And that's one of the reasons why they were so deeply reformed over time," he said.

"Doing a case study on India does not mean that the is supporting the in India," he reiterated.

Gaspar said that the only intended to engage in a conversation that would allow it to collect facts and arguments relevant to policymakers and politicians and eventually help them make the best decisions for their countries.

"That's the type of conversation we thought was useful to engage them on, trying to look at what are the relevant facts and arguments so that we can have a meaningful policy conversation," Gaspar said.

The Fiscal Monitor is not advocating for specific reforms for individual countries, Gaspar said.

"Thats something that depends a lot on the particular circumstances of the country and we engage in that exercise year after year with countries in what we call 'Article IV consultations'," Gaspar said

"One should also take into account broader ramifications such as the public spending programmes that are being replaced and other financing sources," he said.

A is equal cash transfer to all individuals in a country.

First Published: Sun, October 15 2017. 10:03 IST