“I will give you a talisman. Whenever you are in doubt, or when the self becomes too much with you, apply the following test. Recall the face of the poorest and the weakest man [woman] whom you may have seen, and ask yourself, if the step you contemplate is going to be of any use to him [her]. Will he [she] gain anything by it? Will it restore him [her] to a control over his [her] own life and destiny? In other words, will it lead to swaraj [freedom] for the hungry and spiritually starving millions? Then you will find your doubts and your self melt away.” – Mahatma Gandhi
“Wiping every tear from every eye” based on the principles of universality, unconditionality, and agency—the hallmarks of a Universal Basic Income (UBI)—is a conceptually appealing idea. A number of implementation challenges lie ahead, especially the risk that UBI would become an add-on to, rather than a replacement of, current anti-poverty and social programs, which would make it fiscally unaffordable.
Despite making remarkable progress in bringing down poverty from about 70 percent at independence to about 22 percent in 2011-12 (Tendulkar Committee), it can safely be said that “wiping every tear from every eye” is about a lot more than being able to imbibe a few calories. Gandhi ji intuited that it is also about dignity, invulnerability, self-control and freedom, and mental and psychological unburdening. From that perspective, Nehru’s exhortation that “so long as there are tears and suffering, so long our work will not be over” is very much true nearly 70 years after independence.
- and agency
(by providing support in the form of cash transfers to respect, not dictate, recipients’ choices).
- Universal Basic Income is a radical and compelling paradigm shift in thinking about both social justice and a productive economy.
- It is premised on the idea that a just society needs to guarantee to each individual a minimum income which they can count on, and which provides the necessary material foundation for a life with
- access to basic goods and a life of dignity. A universal basic income is, like many rights, unconditional and universal: it requires that every person should have a right to a basic income to cover their needs, just by virtue of being citizens.
The time has come to think of UBI for a number of reasons:
- Social Justice
- promotes many of the basic values of a society which respects all individuals as free and equal.
- It promotes equality by reducing poverty.
- It promotes efficiency by reducing waste in government transfers.
- And it could,under some circumstances, even promote greater productivity.
- Poverty Reduction
- Universal Basic Income may simply be the fastest way of reducing poverty.
- The poor in India have been treated as objects of government policy.
- The circumstances that keep individuals trapped in poverty are varied; the risks they face and the shocks they face also vary.
- UBI is an acknowledgement that society’s obligation to guarantee a minimum living standard is even more urgent in an era of uncertain employment generation.
- Administrative Efficiency:
- In India in particular,the case for UBI has been enhanced because of the weakness of existing welfare schemes which are riddled with misallocation, leakages and exclusion of the poor.
- UBI is not a substitute for state capacity: it is a way of ensuring that state welfare transfers are more efficient so that the state can concentrate on other public goods.
The conceptual case against UBI
- The first concern is whether UBI reduces the incentive to work
- the levels at which universal basic income are likely to be pegged are going to be minimal guarantees at best; they are unlikely to crowd incentives to work.
- The second concern is this: Should income be detached from employment?
- The honest economic answer to this concern is that society already does this, but largely for the rich and privileged.
- The third is a concern out of reciprocity.
- If society is indeed a “scheme of social cooperation”, should income be unconditional, with no regard to people’s contribution to society?
- the short answer is that individuals as a matter of fact will in most cases contribute to society,
- UBI can also be a way of acknowledging non-wage work related contributions to society
- homemaking contributions of women are largely unacknowledged economically, since they do not take the form of wage or contract employment. It is important that UBI is not framed as a transfer payment from the rich to the poor.
What would a UBI potentialy cost?
- The income needed to take her above INR 893 per month (Tendulkar poverty line ), which is the poverty line in 2011-12. This comes to INR 5400 per year. Subsequently, that number is scaled up for inflation between 2011-12 and 2016-17: this yields INR 7620 per year. This is the UBI for 2016-17, which is 4.9 percent of GDP .
Issues to set up :
- Define the non-deserving based on ownership of key assets such as automobiles or air-conditioners or bank balances exceeding a certain size. SECC
- Adopt a ‘give it up’ scheme wherein those who are non-deserving chose to opt out of the programme just as in the case of LPG and are given credit for doing so.
- Introduce a system where the list of UBI beneficiaries is publicly displayed; this would “name and shame” the rich who choose to avail themselves of a UBI
- Self-targeting: Develop a system where beneficiaries regularly verify themselves in order to avail themselves of their UBI – the assumption here is that the rich, whose opportunity cost of time is higher, would not find it worth their while to go through this process and the poor would self-target into the scheme. The issue with an approach of this sort is that it conflicts with the essence of JAM,whose appeal lies in its direct, costless transfer of the state’s welfare subsidies to beneficiaries’ accounts.
- UBI must be embraced in a deliberate, phased manner. A key advantage of phasing would be that it allows reform to occur incrementally.
- A UBI for women can, therefore, not only reduce the fiscal cost of providing a UBI (to about half) but have large multiplier effects on the household.
Sikkim Democratic Front (SDF) has decided to include Universal Basic Income (UBI)
- Sikkim’s ruling Sikkim Democratic Front (SDF) has decided to include Universal Basic Income (UBI) in its manifesto for the upcoming assembly and Lok Sabha elections, according to a report by The Indian Express.
- The state has already begun the process of introducing the unconditional direct cash transfer scheme and is planning to implement the same by 2022. It could become the first state in India to implement UBI.
- The 2017 Economic Survey had advocated implementation of UBI as an alternative to the various social welfare schemes in an effort to reduce poverty.
- The Survey said, “UBI is a powerful idea whose time even if not ripe for implementation, is ripe for serious discussion.”
- However, Finance Minister Arun Jaitley in June 2017 said the scheme as proposed in the Economic Survey will not be politically feasible in today’s India.