What is universal basic income?
- Universal basic income is the periodic unconditional transfer of money to every citizen in the country.
- The idea of universal basic income was first mooted in India through Economic Survey 2017.
Universal basic income: Pilot project
UBI was started on a pilot basis in Madhya Pradesh and West Delhi. It led to following advantages:
- Nutrition improved
- sanitation improved
- health and healthcare improved
- school attendance and performance improved
- women’s status and well-being improved
- the position of the disabled and vulnerable groups improved more than others
- Amount and quality of work improved
Advantages of Universal basic income
- UBI strengthens the economic liberty of an individual, who can spend the money according to his/her need.
- UBI act as an insurance against unemployment, and the emergencies like COVID-19.
- UBI is a step towards equitable distribution of wealth in a society.
- Under UBI, there is no need to identify the beneficiaries. It saves the government machinery from committing inclusion and exclusion errors.
- UBI reduces wastage in govt transfer through various subsidies.
- UBI increases the bargaining power of the lower strata of the population and they could not be forced to accept any working condition.
- UBI would increase the demand for financial services, which will in turn help in strengthening financial inclusion.
- UBI can be a possible solution to loan waiver.
Disadvantages of Universal basic income
- UBI is often criticised as it breeds dependency and make people indolent.
- The money might not be used in fields like education and health and has the potential to be diverted to other non-productive areas.
- UBI is deemed to increase the financial burden on the state exchequer, hence questioning the fiscal prudence of the government.
- In the absence of better support to supply side constraints, UBI is bound to increase inflation.
- It kills the need for work and may encourage individuals to take up the wrong path.
- UBI can also reduce the availability of workers as workers might not feel necessary to work.
- UBI does not solve the fundamental problems of the economy and only treats the symptoms.
Universal Basic Income: Way forward
- UBI has already been experimented in countries like US, Canada, Finland, Spain etc.
- India has the technological capacity and financial resources to liberate the masses from economic deprivation, insecurity and degradation.
- Need to train and streamline local level officers for the proper implementation of Universal Basic Income.
- UBI is dubbed as the income redistribution scheme of 21st century.
- Need to bring universal basic capital. Models like amul, sewa, where people own the wealth they generate.
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