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Making out a case for the other UBI in India

GS Paper 3

Syllabus: Indian Economy

 

Source: The Hindu

Direction: This is an Editorial Piece. Understand the crux of the argument.

 Context:  As per the Author, there are good reasons why Universal Basic Insurance is a better proposition than Universal Basic Income

 Social security systems are like a safety net. It saves a household from falling into a poverty trap. Social security mainly encompasses food security (NFSA), health security (Ayushman Bharat Scheme) and income security.

Types of security nets

  • Passive safety net: E.g., Rising economy, creating more jobs
  • Active safety net (it works like a trampoline so that those who fall on it are able to bounce back) e.g., National Food Security Act, MGNREGA, Ayushman Bharat Scheme
  • Proactive safety net which acts like a launchpad out of poverty e.g., Universal Basic Income

Income security is the trickiest part to tackle in the social security basket. Various government schemes for Income security are:

  • General Provident Fund (GPF)- for Central and State government employees
  • Employees’ Provident Fund (EPF)- for workers in the other organised sector.
  • Public Provident Fund (PPF) that can be availed by any Indian citizen
  • Pradhan Mantri Kisan Maan-Dhan Yojana (PM-KMY)
  • PM-KISAN scheme (for farmers)
  • Atal Pension Yojana (APY)

  

What is Universal Basic Income?

UBI is a model for providing all citizens of a country with a guaranteed minimum sum of money, regardless of their income, resources or employment status.

  • This provides a “safety net preventing any citizen” from sinking below a basic minimum standard of living
  • Economic Survey 2016-17 has recommended UBI as an alternative to the various subsidy

 

Issues with UBI:

  • Lack of political will
  • Huge fiscal pressure
  • Free cash to people may increase the inflation rate
  • Difficulty in reducing subsidies on exiting schemes
  • No guarantee that cash will be spent on productive assets.

 

Why Universal Basic Insurance?

  • Low insurance penetration: The insurance penetration (premium as a percentage of GDP) in India has been hovering around 4% for many years compared to 17%, 9% and 6% in Taiwan, Japan and China, respectively.
    • Thus insurance can become a need-based safety net for the poor.
  • Availability of Data: The economy largely remains informal, data of that informal sector are now available both for businesses (through GSTIN, or Goods and Services Tax Identification Number) and for unorganised workers (through e-Shram, which is the centralised database of all unorganised workers).
    • The social registry portal, ‘Kutumba’, developed by Karnataka is a good example of social security data.

 

Conclusion:

Till the Indian economy grows to have adequate voluntary insurance, social security can be boosted through the scheme of universal basic insurance.

Insta Links

Universal Basic Income

 

Mains Links:

Link it with issues of social justice such as Poverty alleviation, will UBI be successful, Link it with UBI of other countries such as Switzerland (why was it rejected)

Q. The Universal Basic Income, implementation of which has repeatedly been debated in India, seeks to alleviate poverty. Critically discuss the possibility of UBI in India. (250 Words)

 

Prelims Links

Link it with various flagship schemes of government-linked to food security (NFSA), health security (Ayushman Bharat Scheme) and income security. Know the basics of these schemes.