Table of Contents
Universal Basic Income in India –
- unconditional and universal right
- A basic income is an income unconditionally granted to all on an individual basis. Thus, it is a cash transfer rather than in-kind transfer. It is given as a right rather than entitlement.
- IMF in a paper has calculated that India could give a UBI of Rs 2600 per year which is fair enough.
Why do we need universal basic income?
• Reduction in poverty and vulnerability
• A safety net in times of a crisis
• Social justice and equality
• No exclusion errors as it is universal and transferred into bank accounts
• It will lead to financial inclusion as the money will be used in improving employability.
• Lastly, the subsidy regime has failed and a new alternative has to be found
Arguments against universal basic income-
• It would reduce the motivation for work and might encourage people to live off assured cash transfers.
• The expenditure may be wasteful like alcohol and betting.
• How can a single amount satisfy all needs? 5000 Rs per month is fair for a tribal but not sufficient for an urban slum dweller where living costs are high.
• Who will decide what amount is basic income? Politics will always be played as the amount of money spent will be increased by parties to get political benefit.
• It is simply unaffordable. It would entail a cost of 11% of GDP, which is way above the 4.2% of GDP that the government currently spends on explicit subsidies.
• It is also argued that unconditional cash transfers might raise wages due to the decline in the supply of casual laborers.
• There is also question of whether a shift towards it should be a substitute for all existing subsidies or whether it should complement the existing ones.
A better solution would be to work on education, skilling and job generation that will enable everyone to earn and have a basic standard of living.
MINIMUM BASIC INCOME
It is a targeted form of UBI where cash transfers are given to people provided they meet certain conditions of deprivation.
The base was built by Economic Survey 2016-17 and taken ahead by PM Kisan for farmers and proposed in the NYAY scheme during elections
Advantages of minimum basic income-
• Financial inclusion
• Poverty alleviation- Economic survey 2016 said it can reduce poverty to 0.5% at a cost of 4-5% of GDP.
• Social and distributive justice
• Removes inefficiencies of subsidy system
• Freedom of choice
• Reduce rural distress
Concerns of minimum basic income –
• Definition of basic income- Tendulkar Committee makes it as 33rs per day.
• Fiscal considerations- extent of substitution of current subsidies
• Withdrawal from labour market
• Cash vs kind dilemma- In remote places, availability of products is an issue
• Cash transfer is no substitute to state capacity