Universal a minimum income which they can count on,

Topic: BusinessComparative Analysis
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Last updated: December 7, 2019

UniversalBasic Income (UBI), as suggested in the Economic Survey 2017, is premised onthe idea that a just society needs to guarantee to everyone a minimum incomewhich they can count on, and which provides the necessary material foundationfor a life with access to basic goods and a life of dignity. It requires that everyperson should have a right to a basic income to cover their needs, just by beingcitizens. There are three features of UBI that are worth noting. First, it isuniversal and not targeted at the poor alone, thereby removing the numerousproblems associated with means-testing. Second, as it is a cash transfer, thereis no need to provide in-kind transfers or subsidies, both of which come withinefficiencies that interfere with market forces. Third, it is unconditional,so that it is not contingent on the recipients conforming to stipulated normsof behaviour.

Theopponents of UBI pose questions on implementation of such a scheme in a countrylike India with a below poverty line population of 21.9%. The estimates forimplementing UBI vary from roughly 4.9% of GDP to 11% of GDP at a targetquasi-universality rate of 75 percent.

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These figures indicate how expensive UBIis as a scheme to implement. To cover these costs, government would have tostop all centrally sponsored schemes. The Centrally Sponsored and CentralSector Sub-schemes by Budget Allocation costed about 5.2% of GDP in 2016-17. TheEconomic Survey 2017 rationalises the UBI on the premise that if all the povertyalleviation schemes are subsumed into one UBI, the funding for it would betaken care of.

Coupled with the linkage with Aadhar and Direct BenefitTransfer, it shall reduce the administrative costs of running these schemes andleakages in the system.However,there is a fundamental flaw in this approach as most of the Centrally Sponsoredand Central Sector Sub-schemes relate to the expenditure on well-being of thesocially deprived classes. These various poverty alleviation schemes constituteonly a small portion of the Budget Allocation; MGNREGA makes up only about 0.3%of GDP. Moreover, there is all likelihood of diversion of UBI received in thehands of the BPL individual getting utilized largely on food or by men, therebydepriving the women and children of health and developmental benefits; whichare currently being targeted at them under the schemes.

UBI,as only a form of “free donation” to each targeted individual with nofavourable returns is undesirable for a young society (41% of the population isunder 20 years of age) of a developing country like India. It does notcontribute to building a socially responsible population, which needs to learnto take care of have-nots.  MGNREGAconsiders the fundamental right to work and motivates to live a life of dignitybesides creating national assets. As per data collected in 2014-15, almost 47%of the total work covered by MGNREGA was given to SC/ST families and about halfof the workers were women. It is providing livelihood to those communities thathave been marginalised in the society.

Providingwomen with an incentive to work makes them empowered and further helps them information of financial management groups like SHGs. Also, due to its equal-pay policyto both the genders, women are being paid higher wages than before. Under aprivate contractor, a woman would earn about Rs 30, whereas, a man would earnabout Rs 45. Under MGNREGA, however, both the genders earn about Rs 90 per day.This step to overcome the social injustices faced by backward communities andwomen, is something that UBI may never be able to do.Othercentrally sponsored schemes like Janani Suraksha Yojana, meet the cashrequisites of delivering mothers (under BPL).

This scheme also encourages poorfamilies to visit healthcare institutions during delivery, thereby reducing therisk of infection and death for both mother and the infant. This scheme isnecessary in a country like India, where, 5 women die every hour duringchildbirth.Centrallysponsored schemes are forms of public investments that help in upliftment ofthe poor, provide them with better employment opportunities, and improve theirstandards of living. UBI, in their midst, seems like a “leap of faith” and anextremely expensive bet, with no guaranteed impact for improving the conditionsof the under-privileged sections of the society.Another major problem with UBI is that itmay adversely affect work incentives, given the unconditional nature of cashtransfers. On the other hand, having a work requirement creates aself-selection advantage for workfare programmes (you receive welfare only ifyou work), since only the people needing the most would be willing to do hardmanual work. For this, MGNREGA looks a lot more appealing than UBI.

Therefore,rather than looking for magic bullets like UBI, a menu of options on the tableare required to achieve the objective.The problem with replacing India’scentrally sponsored schemes with UBI is that it will leave various other issuesunexplored. The question of justice should not only be the amount that may begiven as basic income to every citizen. Rather, the objective must be that of asociety based on a just return to labour, or fair wage. To live in a fair andjust society, the idea should be to formulate more ambitious objectives whichcover the distribution of income and wealth in its entirety and, consequently,the distribution of access to power and opportunities. To move in thisdirection, we must re-think on a set of institutions and policies whichinteract with each other; public services like health, education, labour laws,and tax system.

 

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