Universal Basic Income Debate

Context:

The current Chief Economic Adviser, V Anantha Nageswaran feels that a Universal Basic Income (UBI) is not needed, as India needs to focus more on economic growth to take care of the aspirations of its people, adding that it should not be on the agenda over the near-term. 

About Universal Basic Income (UBI):

• Universal Basic Income is a concept that proposes providing a guaranteed income to all individuals within a society, regardless of their employment status or income level.

Why to Choose Universal Basic Income (UBI)?

• Poverty Alleviation: By providing a basic income floor, individuals who are struggling to meet their basic needs would have a more reliable safety net. 
  • It can help address income inequality and reduce the poverty gap by ensuring everyone has access to a minimum level of financial security. 
• Economic Stability: UBI can contribute to economic stability by providing a cushion against economic downturns and job losses. 
  • In times of automation and technological advancements that may disrupt traditional employment patterns, UBI can act as a buffer, enabling individuals to meet their basic needs while they adapt to changing job markets or pursue educational opportunities. 
• Human Dignity and Freedom: UBI advocates argue that everyone has a right to live with dignity, regardless of their employment status. 
  • UBI can empower individuals by giving them the freedom to make choices about their lives, pursue their aspirations, or engage in entrepreneurial ventures without the fear of destitution. 
• Simplified Social Welfare System: UBI has the potential to streamline and simplify the social welfare system. 
  • By consolidating various means-tested benefits and programs, it can reduce bureaucracy and administrative costs associated with determining eligibility and managing multiple assistance programs. 
  • This efficiency can result in cost savings and make the system more accessible and user-friendly. 
• Stimulating Economic Growth: UBI injects money directly into the hands of individuals, particularly those in lower-income brackets, who are more likely to spend it on basic needs and essential goods and services. 
  • This increased consumer spending can stimulate local economies, create demand, and potentially lead to job creation and economic growth. 
• Addressing the Future of Work: As automation and artificial intelligence continue to reshape the job market, there are concerns about widespread job displacement, in this situation UBI can be a savior.

Concerns with Universal Basic Income (UBI):

• Affordability: Providing a guaranteed income to every citizen would require a significant amount of money, potentially straining the government’s budget. 
• Cost-Effectiveness: Critics question whether UBI is the most efficient use of resources to address poverty and inequality. 
  • They argue that targeting specific social welfare programs towards those in the greatest need may be more effective and equitable. 
  • For instance, focusing on improving education, healthcare, and infrastructure in marginalized communities could have a more direct impact on poverty reduction. 
• Disincentives to Work: Skeptics argue that providing a guaranteed income to all citizens, regardless of their employment status might create disincentives to work. 
  • They suggest that people may be less motivated to seek employment or pursue higher-paying jobs if they receive a fixed income without the need for work.
  • Critics also express concerns that UBI could lead to a decline in productivity and economic growth if fewer people actively participate in the labor market. 
• Inflationary Pressure: Critics raise concerns about the potential inflationary impact of UBI. If everyone receives a monthly income, it could increase the demand for goods and services, potentially leading to rising prices. 
• Administrative Challenges: Implementing a UBI scheme on a large scale would require a robust administrative infrastructure to manage the distribution of funds and prevent fraud or misuse.
• Impact on Social Welfare Programs: Some critics express concerns that implementing UBI could lead to the dismantling or reduction of existing social welfare programs. 

Does Any Similar Scheme Exist in India?

• While the CEA’s concerns merit attention, the fact is that the UBI genie is already out of the bottle. 
• There is already a critical mass of quasi-UBRI schemes that have been implemented in various states like Rythu Bandhu of Telangana or Krushak Assistance for Livelihood and Income Augmentation or KALIA of Odisha. 
• The Pradhan Mantri Kisan Samman Yojana—that transfers a sum of money to small and marginal farmers—more inclusive by including agricultural and non-farm labor will make it a nationwide quasi-UBRI scheme. 

Conclusion:

• For the highly populous nation, it seems difficult to roll out UBI nationwide in the near future. Hence, it’s time for a plan to share public funds with all citizens in need. Let’s aim to redesign redistribution, employ a digital rupee and give the concept a literal makeover.
• And whenever UBI becomes practical, the government needs to ensure the involvement of all marginalized groups, such as the elderly, disabled individuals, or those requiring specialized support.

News Source: Financial Express