Universal Basic Income- An idea whose time has come?

UBI

         After seventy years of independence, one out of three Indians still live below the poverty line, 25% of the world’s hungry population lives in India, 77% of Indian households do not have regular wage/salaried person in their house and as per the recent Human Development Report 2016, India ranked 131 out of 188 countries in terms of human development. As Mahatma Gandhi wished to “wiping every tear from every eye”, there is a long way to go for India to fulfil the dreams of Gandhiji to not only alleviate but eliminate poverty to provide dignity, self-respect and freedom to the people of the country. In this context, there are various policy options proposed by policy makers and leaders to ensure better and timely delivery of benefits to the people. Cash transfers are direct payments given to the people based on certain criteria or otherwise. Cash Transfers schemes are present all over the world in different forms. The nature of the schemes can be understood on the basis of conditionality, targeting and the frequency of transfer.

Conditional Cash Transfer- Conditional Cash Transfer schemes provide cash benefits directly to the poor households on the basis of fulfilment of certain specified conditions. It creates incentives for the individuals to adjust/modify their behaviour in order to comply with conditionality. For instance- LPG subsidy is a kind of conditional cash transfer. Under this scheme, people need to use LPG gas for cooking then only they can get the subsidy. It serves dual purpose of providing hassle free cash transfers to the poor households for cooking fuel and also protect environment by promoting clean fuel.

However, there are some issues with the conditionality. It is very difficult to take punitive measures against those who do not fulfil all the conditions. For instance, government is focusing on toilet buildings under Swachh Bharat Abhiyan and provide subsidies for that. However, if people do not use toilets, it is very difficult to punish them or deny them the subsidy. Another issue with the Conditional Cash transfer schemes is that it does not address the product/infrastructure supply issues. For instance- If people have money but there is no medical facilities nearby, how they are going to utilise that money.

Unconditional Cash Transfer- Unconditional Cash Transfers provide cash transfers to intended beneficiaries without putting any conditions. It creates freedom of choice to the poor households/individuals to spend their money in whatever manner they want. It is transparent and emancipatory for the people who receive the cash transfers. It also provides some security to the people because of regularity. As per various studies in various countries, it was found that cash transfers automatically help in improving better nutrition, school attendance and women economic status.

However, as per the critics, unconditional cash transfers can make people lazy. It is also very difficult to withdraw cash transfers once provided because of political reasons. Another important issue is that whom should get this money-all the citizens of the country or who are below poverty line. But as we know, there are so many issues in the identification process of intended beneficiaries. “JAM-(Jandhan,Aadhar and Mobile) number trinity can be the solution. But, there is lack of financial inclusion in our country. People have cell phone, Aadhar number but they lack banking facilities in their vicinity. Mobile Banking in the era of Digital India can help bridging this gap but there are also constraints there because of lack of penetration internet facilities.

Universal Basic Income- Universal Basic Income(UBI) is a revolutionary and radical idea which is based on the premise that a just society needs to guarantee to each individual a minimum income which they can count on, and which provides access to basic goods and a life of dignity. It is universal and unconditional. Under this scheme, the public authority will provide a basic income to every citizen of the country. This idea got support from both the left and right leaning political leaders and policy makers. To reduce abject poverty and unemployment, this idea can provide a substantive solution. It can also act as an insurance in the case of job losses due to automation as predicted by international organisation.

F&A

Arguments in favor of UBI-

  • It will remove abject poverty and bring about ‘social justice’ in our country.
  • It will provide freedom of choice and dignity to the people to decide about their own fate.
  • It will also reduce the burden of bureaucracy in identification process and simplify the welfare mechanism thereby increasing administrative efficiency.

Arguments against UBI-

  • Individuals will misuse the money for bad habits and constant cash transfers will reduce labour productivity.
  • It is really difficult to create a proper implementation mechanism for such a vast income transfer.
  • And the most important difficulty is about financing this idea. Who will provide the cost?

In fact, there was two pilot projects launched in Madhya Pradesh for Universal Basic Income. It was found that there was no reduction in work and people started working more shifting from casual work to self-employment. As this Economic Survey discussed about this idea in detail in a single chapter providing various modalities of implementation. In fact, government provides lot of subsidies which can be rationalised to provide for universal basic income. Because as Thiruvallur said “Nothing is more dreadfully painful than poverty”, and gripping poverty robs a man of the lofty nobility of his descent”. It is high time that country debates about this idea and implement it to reduce the dreaded disease of poverty from our country.

Disclaimer- It is my personal view and analysis. Everyone has a right to differ.

If you want to know more about this idea, please see the links below:

http://indiabudget.nic.in/es2016-17/echap09.pdf

http://basicincome.org/basic-income/

http://fortune.com/2017/05/24/automation-job-loss-universal-income/

http://www.cnbc.com/2017/05/25/mark-zuckerberg-calls-for-universal-basic-income-at-harvard-speech.html

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