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Insights into Editorial: It’s time for a universal basic income programme in India

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Context:

The ongoing crisis is creating changes that could end up dividing society into pre- and post-COVID-19 days.

These changes are also likely to exacerbate the novel challenges accompanying the fourth industrial revolution.

Today, disruptive technologies like artificial intelligence are ushering in productivity gains that we have never seen before.

They are also steadily reducing human capital requirements, making jobs a premium. A microcosm of these trends can be seen in Silicon Valley. The region is home to five of the world’s eight most valuable companies.

These giants, all technology companies, have a cumulative market cap of over $4 trillion, yet they together directly employ just 1.2 million people.

About Universal Basic Income:

A basic income is a regular, periodic cash payment delivered unconditionally to all citizens on an individual basis, without the requirement of work or willingness to work.

UBI has three components: universality (all citizens included), unconditionality (no prior condition), and agency (by providing support in the form of cash transfers to respect, not dictate, recipients’ choices).

Tool to eradicate poverty:

  1. Many consider a universal basic income (UBI) programme to be a solution that could mitigate the looming crisis caused by dwindling job opportunities.
  2. UBI is also deliberated as an effective poverty-eradication tool. Supporters of this scheme include Economics Nobel Laureates Peter Diamond and Christopher Pissarides, and tech leaders Mark Zuckerberg and Elon Musk.
  3. UBI in its true sense would entail the provision of an unconditional fixed amount to every citizen in a country.
  4. Nevertheless, countries across the world, including Kenya, Brazil, Finland, and Switzerland, have bought into this concept and have begun controlled UBI pilots to supplement their population.
  5. India’s huge capacity and infrastructure-building requirements will support plenty of hands in the foreseeable future.
  6. Nonetheless, even before the pandemic, India was struggling to find enough opportunities for more than a million job aspirants who were entering the job market each month.
  7. The fiscal cost of a UBI pegged at Rs.7,620, at 75% universality, was 9% of the GDP.
  8. A UBI on par with the numbers suggested by the Economic Survey could lead to targeted household incomes increasing by almost Rs.40,000 per annum, since the average Indian household size is approximately five.

Suggested previously by various agencies:

  1. The Economic Survey 2016-17 advocated in favour of monetizing the existing schemes with universal targeting (gradually) so that none is left out (as it makes it administratively simpler and cuts down problems associated with targeting beneficiaries).
  2. India’s Self-Employed Women’s Association (SEWA) with support from UNICEF has been conducting a cash transfer pilot project in rural villages.
  3. The International Monetary Fund (IMF) had once proposed quasi-basic income schemes that leave out the well-off top quartile of the population as an effective means of alleviating poverty and hunger.
  4. Positive results were found in terms of nutrition, health, education, housing and infrastructure, and economic activity.
  5. Sikkim’s ruling party, the Sikkim Democratic Front (SDF), has decided to include UBI in its manifesto ahead of the Assembly elections 2019 and aims to implement the scheme by 2022.
  6. The political will was nonetheless lukewarm because of the costs involved.
  7. Requirements to trim some of the existing subsidies to balance the resultant deficit were also difficult political minefields for the then government. So, the proposition was finally shelved.

The times now are very different:

IMF has projected global growth in 2020 to be -3.0%, the worst since the Great Depression. India is projected to grow at 1.9%.

The U.S. economy is expected to fall by 5.9%. The unemployment rate and unemployment claim in the U.S., since President Donald Trump declared a national emergency, is the highest since the Great Depression. Unfortunately, India does not even have comparable data.

UBI will Support unpaid care workers: Those with ill or differently abled relatives are often forced to quit their jobs and look after them full-time.

UBI would allow care-workers to support themselves, encouraging care work and taking pressure off public services that provide care to the sick and elderly.

Conclusion:

UBI is a powerful idea whose time even if not ripe for implementation, is ripe for serious discussion.

Lockdowns in some format are expected to be the norm till the arrival of a vaccine.

With almost 90% of India’s workforce in the informal sector without minimum wages or social security, micro-level circumstances will be worse in India than anywhere else.

The 2017 Economic Survey had flagged the UBI scheme as “a conceptually appealing idea” and a possible alternative to social welfare programmes targeted at reducing poverty.

UBI envisages an uncompromised social safety net that seeks to assure a dignified life for everyone, a concept that is expected to gain traction in a global economy buffeted by uncertainties on account of globalization, technological change, and automation.

The frequent sight of several thousands of migrant labourers undertaking perilous journeys on foot in inhumane conditions is a disgraceful blight on India.

One way to ensure their sustenance throughout these trying times is the introduction of unconditional regular pay checks at maximum universality, at least till the economy normalises. If universal basic income ever had a time, it is now.

 


Insights Current Affairs Analysis (ICAN) by IAS Topper