The Indian government is set to endorse Universal Basic Income

India's nominal GDP is $1,820 per person.

I have seen this happen in Pakistan during the years of Musharraf's presidency.

The economy was moving up and more investments were coming in. More money was flowing. The prices of local products went up, especially food. Of course, more foreign products also made their way into the country. Some people were profiting from this movement, but the people who were poor could not benefit and they sunk deeper and went hungrier.

The supply of food was never able to meet demand, so prices are still high even now. Income never went up as much to compensate for the higher prices. Something about the mechanics of price setting got stuck somewhere. It is difficult to say where though: policy, trade, corruption, inflation, deflation, waste, or maybe it was technological limits.

But the answer is more complicated than supply will grow to meet demand. My theory is that a stagnant poor economy brought greater equilibrium to wealth distribution. When the economic conditions were sustained, people achieved social efficiencies in trying to save the supply of products and squeeze more out of less. When the economy exploded, waste increased, and demand was never met, either for reasons where people switched trades and could not switch back, excessive trade costs kept prices high, or maybe prices only go down in times of recession.

If I reversed the question now though, I would ask why cannot current prices go down to accommodate for greater demand (even if the demand is financially weak).

Because claiming that UBI will cause inflation is not justified by an understanding of Economics 101. Most basic economic theory will state that inflation is basically a monetary phenomenon. (Now, if you use monetary expansion to pay for the UBI, as the occasional person has suggested, then Econ 101 would suggest inflation, but that's true for any expenditure funded that way.)

> Judging by your comments on this thread, you neither know nor care about this. You speak as if the only downside to this entire affair was 100 people dying, all the while citing 0 sources.

No I care about it. But the problem is that most of them did not cite sources and were rhetorical. So I had to reply back in rhetoric. Since you cite sources I'll reply with sources too:

"It would be helpful if you cited your sources for this. From what I've seen and read, most people found a way to launder their black money through brokers. [2] That's not just speculation, most of the 17 trn rupees of cash has found its way back into legal channels. [1]"

Sure. Firstly your news reports are based on here-say and incorrect data. The correct RBI data is available in this article: http://swarajyamag.com/politics/the-rs-11-lakh-crore-deposit...

Always refer to RBI bulletins and press releases. Don't believe motivated reports.

> You were also very cavalier about the downsides of this move. Yes, those 100 deaths are a loss, but far more people were affected. Many did not have any money for a month or more because their employers did not have cash to pay them. There were 8 million affected workers in the beedi industry alone, more in other sectors. These are daily wage labourers, remember. [2]

Why are these daily wage laborers not paid through cheques or wire transfer? The Government of India already has a "Jan Dhan Yojana" which is a simple form that facilitates opening of bank accounts (along with e-banking facilities) for lower income groups without going through any hurdles (all you need is an Aadhar card to open the account). In fact, even the employers can do it for their laborers on their behalf (I have already done it for my maid servant). The real story is that the employers wanted to pay cash so they can fudge their Book of Accounts with a higher entry and claim tax deductions. There was no real-world transaction to back their claims and the Income Tax department had to take them at face value.

> Many farmers were forced to sell their crops for pittances to make ends meet. One example is cauliflower being sold for ₹ 1/kg. Its usually sold at ₹ 12. The prices of soyabeans was down by 77% [2]

I definitely sympathize with farmers. However, this is a short-term impact. Many of these farmers are adopting digital payments (PayTM, BHIM app etc) to transact and the Government is conducting camps educating farmers on digital payments. I recently bought bananas from a street vendor (who sell on carts and don't have a proper outlet) by paying through PayTM. You just need to wait for the long-term impact of this policy to play out.

We measure success or failure of such economic policies with statistics, not by political opinion polling - Yes. Hence we need to check the data to see if worked instead of picking political points like blood of citizens or Gujarat riots.