How would you feel if a certain amount of money is automatically credited in your bank account every month? Would you rather spend it to fulfil your needs or would you like to spend it on fun activities? This was the dilemma faced by the Government of India with respect to Universal Basic Income.
Introduction:-
The Annual Economic Survey of 2016-17 highlighted a new concept of Universal Basic Income which became a matter of debate among economists and scholars. Universal Basic Income (UBI) is a social welfare program where all citizens or residents of a country regularly receive a set amount of money from the government, regardless of their income level, employment status, or other factors. The survey also provided an outline of how it would be paid for. Crucially the money would largely come from around 950 existing welfare schemes. This concept of periodic unconditional cash transfer to every citizen in the country seems to be quite appealing in the context of non-meeting of targets, leakages and corrupt practices of existing welfare schemes. Understanding UBI provides insights into income distribution, resource allocation, labour market dynamics, and the role of government in addressing socioeconomic inequalities.
Benefits of UBI:-
First and foremost, Universal Basic Income would ensure basic minimum facilities to all which even after so many efforts have not been successful. It would provide freedom to people in a true sense. Insurance against unemployment would help in the reduction of poverty and hence equitable distribution of wealth. Increased income will increase the bargaining power of individuals as they would no longer be forced to accept bad working conditions. In India apart from its anti-poverty potential, it can also be a substantial measure to improve autonomy (like women who do not earn) and dignity by giving workers an escape ladder from socially despised occupations. Moreover, it would also reduce administrative time and cost and promote efficiency by reducing wastage and leakages. Transferring basic income to banks would also expand financial inclusion. It would indirectly improve health, increase literacy, enhance productivity, increase entrepreneurship etc. Hence with this effort, India can witness social, economic, and political development in the long run.
Addressing criticisms:-
Despite encountering criticism from various angles, advocates of Universal Basic Income (UBI) contend that these obstacles can be overcome. For instance, concerns about UBI fostering laziness and dependency are countered by the belief that individuals inherently strive for improvement beyond basic sustenance. Questioning the spending decisions of the impoverished is viewed as a biased elitist perspective, as individuals are deemed capable of making responsible choices about their own welfare. Issues related to determining the suitable amount and recipients of UBI, including considerations of gender, socioeconomic status, and wealth distribution, can be managed by policymakers effectively. Despite criticisms regarding the fiscal burden on governments, some advocates suggest that consolidating numerous inefficient welfare schemes into one comprehensive UBI program could yield more tangible benefits. Pilot projects have also been cited as evidence of UBI's efficacy in alleviating poverty and promoting economic stability.
Challenges and opportunities for India:-
Recognizing the challenges inherent in implementing Universal Basic Income (UBI) in a developing country like India, it is acknowledged that transitioning to such a system would pose difficulties, particularly given the widespread necessity for citizens to travel long distances to access banking services. However, proponents suggest that these hurdles could be addressed by adopting a phased approach, initially implementing UBI in smaller regions before scaling up. The Economic Survey also emphasized the importance of initiating serious discussions about UBI, even if the timing may not yet be optimal for its nationwide implementation.
Conclusion:-
Universal Basic Income represents a bold step towards social, economic and political development. While the challenges exist, they are not insurmountable. By reimagining social security and welfare systems, India can pave the way for a more inclusive and empowered society. Moreover, UBI serves as a case study for examining the potential trade-offs between economic efficiency, equity, and social welfare, enabling students to develop critical thinking skills and formulate informed policy recommendations. By studying UBI, we gain a deeper understanding of contemporary economic issues and contribute to ongoing debates on poverty alleviation, social welfare, and inclusive growth. As we go through the complexities of implementation, as members of the Centre for Distance and Online Education (CDOE), let us engage in thoughtful dialogue and innovative solutions to ensure a brighter future for all.
Author:- Shreya Garg - Assistant Professor
Department of Economics - CDOE
