India Needs Basic Income Scheme To Make Lockdown Work: Thomas Piketty
India needs to introduce a basic income scheme to make the six-week coronavirus lockdown work, French economist Thomas Piketty said.
He believes that India has the potential to become the global democratic leader in the 21st century if it manages to address the issue of inequality.
The Narendra Modi government imposed a nationwide lockdown on March 25 to curb the spread of the Covid-19 pancemic. Since then, the restrictions have been extended twice.
“I think the government would be well advised to introduce a basic income scheme, and more generally to develop a safety net in India,” Piketty, currently a professor at Paris School of Economics, told the Press Trust of India in an interview on Tuesday. “I do not see how a lockdown can work without a system of income maintenance.”
The idea of a universal basic income in India was proposed in the Economic Survey for 2016-17 by former Chief Economic Adviser Arvind Subramanian. The idea was echoed by political leaders last year during campaigning for 2019 Lok Sabha elections.
Piketty also pitched for more equitable and progressive taxation, including a wealth tax and inheritance tax, in India. "India has the potential to become the global democratic leader of the 21st century, assuming the country manages to come to terms with its legacy of inequality," he said.
"The attention that was put to the reservation system was not matched by sufficient attention to other issues, including land reforms and redistribution of property, and the funding of adequate education, infrastructure and health investment through a more equitable and progressive tax system (including a wealth tax and inheritance tax).”
According to Piketty, a pandemic can have contradictory effects on inequality. "On the one hand, it can raise the legitimacy of public investment in health, infrastructure and education. But, on the other hand, it can also raise the fear of strangers and reinforce the pre-existing trends toward sectarian conflicts," he said.
Before the pandemic, the French economist had said that the trend toward sectarian conflict reflected the lack of political ambition to change the economic system and to put in place a system that is truly based on economic justice. "This will be even more true after the pandemic. We need to think again about how to reconcile prosperity and equality," he said.
When asked how the coronavirus pandemic will impact India's rising inequality, Piketty said the experience of the Spanish flu of 1918-20 is frightening. "According to some studies, mortality rates were as large as 5 percent in India or Indonesia, as compared to 0.5-1 percent in Western Europe and the U.S. "It seems unlikely that things can get so bad today, but this means that we have to be very careful.”
Piketty, who has worked extensively on issues like inequality and poverty, said that by looking at a broader range of historical trajectories, he has also come to stress the key role of ideological and political change in the evolution of inequality.
"The main determinants of inequality are not economic and technological. They are ideological and political," he said.