Universal Basic Income & Minimum Basic Income

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.
Universal Basic Income Pros and cons
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

Video Lecture On Universal Basic Income