IS INDIA READY FOR UNIVERSAL BASIC INCOME?

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This article was written by Ankesh Kumar, a student of Army Institute of Law.

Many citizens in the country are not in a position to earn their livelihood, their sources of income are meager and so what is supposed by the concept of Universal Basic Income (UBI) is that some minimum income would be guaranteed to all the citizens, so that it takes care of their basic needs and livelihood. So, UBI is a form of social security in which all citizens of the country would receive an unconditional sum of money every month from the government irrespective of in addition to any other income that they may be earning themselves.

The idea of UBI is not new. The first known suggestion of an unconditional UBI for all adults regardless of other income sources was from Thomas More in 16^th century.

The Economic Survey 2016 was tabled in parliament on 31 January by Finance minister.It recommended UBI to replace the existing range of subsidies like Public Distribution System, Food Security Act, Fertilizer subsidy and other scheme aimed at reducing poverty.The basic idea is that once you introduce UBI, then the need for subsidies which are given right now would not be there. The report justified the introduction of UBI citing several reasons such as promoting social justice,reducing poverty etc.

Finland is the best known trial. Two Thousand randomly selected unemployed Finns will receive €560 in guaranteed tax free incomes every month for next two year. If the pilot is successful, the programme could be extended to all adult Finns. The Switzerland people rejected this proposal in 2016.

An acceptable level of the UBI could be an income equivalent of poverty line (the Tendulkar committee poverty line) which is about 1090 per month for each individual. This will reduce poverty rate to zero in one stroke. But the total cost of providing this much income is 12.5% of GDP which is way above the 4.2% of GDP. So providing such UBI to every Indians will give huge financial burden to country.

As per the economic survey, suppose top 25% of the population who are in the highest income bracket do not take UBI in that case, it would cost 5% of GDP; in that case poverty level will come down to only about 0.5% as against 22% in 2011 census

ARGUEMENT IN FAVOUR OF UNIVERSAL BASIC INCOME

• It may be the fastest way of reducing poverty.
• Providing UBI through transparent means, transferring cash to the account of the people, it will promote efficiency and wastage will be avoided.
• Right now, government is giving certain subsidies like PDS,MNREGA, LPG subsidy etc so, the citizens have no option but to accept whatever is being given by the government, despite they wanted something else like clothes, fruits etc , so, they do not have a choice. But, once you give them unconditional cash transfer, and thenthey get liberty to buy whatever they want to do as a result, they became agent; they do not become subject.
• When people do not have any source of livelihood, then whatever comes their way they have to accept, because they have to survive. But ,once you give some sort of UBI , in that case there will be less exploitation, and they will be in a position to bargain more and they will not be forced to accept any sort of working condition just to survive.
• It is not always possible to quantify the people below poverty line,there may be many poor peoples who may not be identified in the welfare scheme that are existing today. So, by giving UBI, there will be no poor who is excluded from the scheme of UBI.
• There are lacunae in the existing subsidies scheme , a lot of money out of the fund which is allocated for providing subsidies to the citizens go in the form of corruption money in the pocket of many middle man, so that will also disappear as UBI directly go to bank account .
• The trinity of Jandhan, Aadhar, Mobile(JAM) along with UBI, which means money will be directly transferred to the citizens ,then it will definitely improve administrative efficiency of poverty reduction.
• Each member of the family will get UBI.
• Even if a person is not able to get any other employment,some sorts of basic income through UBI will give him a safety net against health, income and other shocks. A guaranteed income will reduce the pressure of finding the basic needs, leading to psychological advantages to a poor.

In 2011, a pilot project called the ‘Madhya Pradesh Unconditional Cash Transfers Project (MPUCT)’ was launched in rural Madhya Pradesh through Self Employed Women’s Association (SEWA), in collaboration with UNICEF.For 12-17 months, over 6,000 individuals received small unconditional monthly cash transfers, or grants under the two pilots the central design premise of the pilot was that the basic income was paid every month, to all individuals within a village. Transfers for children under the age of 18 went to the mother or, if there was no mother, a designated guardian.The results of these pilots published in the book Basic Income: A Transformative Policy for India. (2014, London: Bloomsbury) showed many encouraging implications, and was a positive step in debunking the myths that basic cash transfers in rural India wouldn’t be helpful as either it would lead to a decrease in labour work or money would be wasted away in alcohol consumption and other trivial pursuits by the villagers.It is found that those who received income report a significant nutrition level increased and diseases decreased, overall development and economic spin off to establish business (entrepreneurship).

ARGUEMENT AGAINST UNIVERSAL BASIC INCOME

• UBI reduces the incentive to work. If you get free money without doing work, many would not do any work,this may make them lazy and therefore many may opt out of the labour market. So people doing less work means that the potential workers will lose the productivity, thereby affecting the nation adversely.
• “Give man a fish and you feed him for a day. Teach a man to fish and you feed him for a life time” so instead of the amount of money which will given to the people, it must be utilized on them to teach them how to earn money.
• Money spent on UBI (which is expected to be in the range of 5 to 12 percent of GDP depend upon how much amount is paid as UBI) can be used for creating useful asset for the nation like infrastructure, hospital, roads etc, and thereby also providing employment to the people.
• There should be element of reciprocity because you are giving income to the individual even though he is not contributing toward the society welfare, he is simply sitting ideal yet you pay him every month UBI defied this logic.
• Household especially male members may spend the free money on wasteful activities like alcohol, cigarette, if cash is given.
• Once introduced, it may become difficult for the government to wind up UBI, in case of failure, because of electoral policy. Suppose the party which is in power wants to withdraw UBI scheme, then the party will be scared of losing the votes of the people. So no party in power would like to close down UBI, even if this scheme completely failed.
• Unlike food subsidies UBI is not subjected to fluctuating market price. Suppose you are giving food subsidies now whether the wheat price is 20rs or 30rs per kg, the person will still get 5kg wheat per month, but if you are transferring cash then suppose, the price of wheat increased then purchasing power of the cash which is transferred to every citizen will definitely be less, so a cash transfer purchasing power may be severely be curtailed by the market fluctuations.

THE WAY FORWARD …HOW TO IMPLEMENT UBI

The Economic Survey 2017, itself mention that””….UBI is a powerful idea whose time, even if not ripe for implementation, is ripe for serious discussion“. The survey suggests that UBI may be implemented gradually in a deliberated phased manner, such as in following manner:

• UBI for women in the beginning.
• UBI for certain vulnerable groups, such as-widows, pregnant women, old and disabled person.
• Give choice to the people , you leave all the subsidies in place of that you accept so the people who are willing to replace their subsidies by the UBI, they will be provided the UBI, and those who want to continue with the existing subsidy , they may continue to get that.