Print Friendly, PDF & Email

Universal Basic Income

Topics Covered: Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes; mechanisms, laws, institutions and bodies constituted for the protection and betterment of these vulnerable sections.

Universal Basic Income

Context: National Human Rights Commission (NHRC) has informed the United Nations Human Rights Council (UNHRC) that the recommended implementation of a universal basic income was “under examination and active consideration” of the Centre.

Why its needed now?

  • In order to deal with the Covid-19 pandemic, the governments across the world have imposed measures like lockdown and social distancing.
  • However, these measures have caused collateral damage to almost every sector of the economy, so much so that the International Monetary Fund held the current economic crisis could be the worst ever since the Great depression 1929.
  • With almost 90% of India’s workforce in the informal sector without minimum wages or social security, micro-level circumstances in India are worse than anywhere else.

Therefore, regular payments through Universal Basic Income (UBI) can ensure the sustenance of the workers engaged in the informal sector, at least till the economy normalises.

What is Universal Basic Income?

It is a programme for providing all citizens of a country or other geographic area/state with a given sum of money, regardless of their income, resources or employment status.

The main idea behind UBI is to prevent or reduce poverty and increase equality among citizens. The essential principle behind Universal basic income is the idea that all citizens are entitled to a livable income, irrespective of the circumstances they’re born in.

UBI has the following important components:

  1. universality (all citizens included)
  2. unconditionality (no prior condition)
  3. Periodic (Payments at periodic regular intervals)
  4. Payments in cash (not food vouchers or service coupons)

Benefits of Universal Basic Income (UBI):

  1. Provide secured income to individuals.
  2. Reduce poverty and income inequality in society.
  3. Increase the purchasing power of every poor which will further increase aggregate demand.
  4. Easy to implement because no identification of the beneficiary is involved.
  5. Reduce the wastage of government money because its implementation is very simple.

Supporters of the idea:

The Economic Survey of India 2016-17 has advocated the concept of Universal Basic Income (UBI) as an alternative to the various social welfare schemes in an effort to reduce poverty.

Other Supporters of the UBI programme include Economics Nobel Laureates Peter Diamond and Christopher Pissarides, and tech leaders Mark Zuckerberg and Elon Musk.

Challenges in Implementing Universal Basic Income in India:

High cost involved in implementing UBI is a major factor contributing towards lack of political will in working towards the universal basic income in India.

It would reduce the motivation for work and might encourage people to live off assured cash transfers and it is simply unaffordable.


Prelims Link:

  1. Components of UBI.
  2. Supporters

Mains Link:

Examine the arguments in favour and against introduction of universal basic income in India.

Sources: the Hindu.