The implementation of Universal Basic Income has constantly been debated over in India. It seeks to provide basic, guaranteed, regular, unconditional, in-cash income transfer to all the individuals of a nation. The idea of basic income belonging to all, promotes the value of the society, which represents all individuals as free and equal. The scheme being anti-paternalistic in nature promotes liberty and reduces poverty.
Nehru said, “so long as there are tears and suffering, so long our work will not be over.” Drawing from this and seeing the inefficient implementation of government’s welfare policies (mainly because of poor targeting and corruption), supporters of UBI say that, UBI could be to the 21st century what civil and political rights were to the 20th century.
The five features of the scheme are:
- Payment at a regular interval
- Payment in cash
- Payment to individuals
- Universality
- Unconditional
It will solve problems like misallocation, out of system leakage and exclusion error, which most of the government schemes face.
Globally, nations have tried UBI. Finland did a two-year long experiment to check the effect of UBI on its unemployed citizens (commenced in 2017). Some cities in the Netherlands have launched a municipal level pilot project.
In India, Sikkim became the first state to test drive UBI scheme and it is an ideal state to do so. Having surplus power generating capacity with export nearly 90% of 2200 MW ensures steady revenue to Sikkim. The state’s government said that in order to get the financial resource for the implementation of UBI it would stop providing support to its citizen’s through other schemes. Given the sheer number of schemes run by the government of India (950 centrally sponsored schemes) and its impact on union budget (5% of GDP) stopping all the other scheme for the introduction of UBI is the way Arvind Subramanian also suggested in the Economic Survey of (2016-17).
There is a section of people which opposes the implementation of UBI for many reasons. Some of the reasons are like:
- Guaranteed income to people will reduce their incentive to work,
- Detaching income from employment will reduce the capability of people and they will become lazier,
- Some people point out that if society is a result of social cooperation, then by making income unconditional we will attack people’s contribution towards society.
- With high-income inequality in India, how a policy like UBI, where the government will give equal income to all, will be fair for poor
- To cover the fiscal cost for the scheme, if the government chooses to substitute all other welfare schemes with UBI, then how will a regular fixed amount of money cover, cover all the expenses of the individuals in case of price rise of the commodities in the market.
These are some of the major oppositions placed in front of UBI’s implementation.
The first concern is of people losing incentive to work if given guaranteed income. It is a diminution of human dignity to suppose that the only motivation for which a person works is to fulfill his necessities. Critics, who support this point, need to understand that the amount which the government is proposing to give to people under this scheme is “basic” by its nature. It is so basic that it will only give him/her bare meal for a day.
And in order to sustain the livelihood, a person needs many things like shelter, clothes, education of his/her children, health care, etc. Basic income will only give him/her a safe cushion from the worst financial shock. This safety should be provided to him/her by the state, which is his/her right to get only by virtue of being a citizen. The insurance will not make him/her lazy and will not reduce his/her capacity; if anything it will only empower them because they will not feel less cared for, they will feel less neglected and marginalized. By giving most marginalized the last net to lie upon (in form of UBI) state is only performing its minimal welfare duty.
Many people have a problem with the “universal” nature of the scheme. They say that by giving equal income to rich and poor this scheme is distributing money to the rich, who don’t need it and by doing so it is being unjust to the poor, while also increasing the state’s burden.
In a draft report released last year, the World Bank suggested reading the policy of Basic Income “through the lens of progressive universalism.” The reason for maintaining conditional social assistance is to “prioritize those at the bottom of the income distribution”.
While this is contrary to the UBI principle, it is important to pinpoint those “who are the most vulnerable, where they live, and how vulnerable they are.” The economic survey of 2016-17 assumed that in practice any program cannot aim for strict universality, so a target quasi-universality rate of 75% should be set. This is called a de facto universal basic income model.
The most important problem is how will the government cover the fiscal cost of the scheme. Substituting all other schemes with UBI is not the way to out for it. UBI is like the last safety net for people, it should not become the only net. The government cannot afford to assume that one basic income welfare scheme will be sufficient to provide all kinds of social welfare to its citizens like- health, education, employment, fertilizer subsidy, etc.
UBI should supplement other welfare schemes, not substitute them, like the way it was meant to be (in European nations). The question then is, how will state support the fiscal cost of it. The answer lies in checking our tax to GDP ratio. India’s tax to GDP ratio is one of the least in the world. The government needs to find out ways to tax more on the less taxed properties of the rich and distribute this money to the poor through the UBI channel.
Currently, we need to understand that Universal Basic Income is a policy issue, which requires serious attention of the policymakers. It is not a thing for a politician to use a “term” in their election manifesto only to attract votes from one section of the population or another.