Mains Practice Questions

Approach

• Introduce the topic by giving brief on Universal basic income
• Discuss its advantages and disadvantages

Introduction

• A universal basic income is a regular, periodic cash payment delivered unconditionally to all citizens on an individual basis, without the requirement of work or willingness to work.
• The five broad features of such schemes are payments at periodic regular intervals (not one-off grants), payments in cash (not food vouchers or service coupons), payments to individuals, universality (all citizens included), and unconditionality (no prior condition).

Advantages over Targeted Social welfare programmes

• Social Justice: UBI promotes economic and social equality by removing gap between rich and poor, men and women which is hard to achieve through social benefit programmes.
• Poverty Alleviation: UBI ensures minimum basic income to everyone thereby directly attacking poverty
• Autonomy: UBI liberates citizens from paternalistic relationships with the state as people can decide the services they want and not the services dictated by government (Social welfare schemes).
• Adequate Standard of living: UBI guarantee a minimum living standard to all individuals who are part of society.
• Administrative Efficiency: UBI will be an improvement over existing welfare schemes which are riddled with misallocation, leakages, and exclusion of the poor.
• Prevents Leakages: Due to universality and unconditionality, UBI prevents misallocation and leakages.
• Safety Net: This income floor will provide a safety net against health, income and other shocks.

Disadvantages Over Social Welfare schemes

• Low Work Incentive: UBI may reduce the incentive for work. A minimum guaranteed income might make people lazy and opt out of the labor market. Schemes like MGNREGA promotes Gandhian philosophy of income through work/labour.
• Gender biased: Patriarchy may regulate the sharing of UBI within a household – men are likely to exercise control over the spending of the UBI. This may not be the case with other in-kind transfers.
• Implementation issue: Given the current status of financial access among the poor, a UBI may put too much stress on the banking system.
• Subject to market risks (cash vs. food): Unlike food subsidies (PDS) that are not subject to fluctuating market prices, a cash transfer may not address the issue of the decline in purchasing power due to inflation.

Way Forward

• Universal Basic Income is a radical and compelling paradigm shift in thinking about both social justice and a productive economy.
• There are concerns regarding UBI as against the poverty alleviation schemes presently running but the advantages of UBI are far greater.
• As per the economic survey 2016-17, UBI could be the fastest way of reducing poverty.

• UBI concept is not new to India. Schemes below are a kind of income support, in the form of  money transfers, to Economically disadvantaged people in one form or the other.
• National Old Age Pension Scheme (NOAPS)
• Indira Gandhi National Widow Pension Scheme (IGNWPS)
• Indira Gandhi National Disability Pension Scheme (IGNDPS)
• Ryuthu Bandhu scheme.
• UBI envisages an uncompromised social safety net that seeks to assure a dignified life for everyone.
• UBI is a powerful idea whose time even if not ripe for implementation, is ripe for serious discussion.