“I promise there will be justice for the poor. The congress guarantees that 20% families belonging to the poorest of the poor category will be given Rs. 72000/year.” A conspicuous statement made by a hazy leader named Rahul Gandhi. I don’t know whether it is a gimmick to come back in power or a promise to be fulfilled soon, but one thing that I know is the effects of it on the Indian economy. It is called universal basic income, which is followed in many of the European nations, such as Switzerland and Finland.
Now, talking about the positive effect of it on society and economy.
First, it increases the flow of money in society as a result of which demand increases, which in turn increases the production, employment and growth rate.
Second, it will decrease the gap between the rich and the poor, since 73% of resources are concentrated in the hands of the top 1% of Indians, as per an OXFAM Report.
Third, it will reduce poverty across the country.
Now, coming to the negative effects of it.
First and foremost, the problem with this is the identification of the target audience, and even if it is identified, there can be inclusion and/or exclusion error in the list of beneficiaries.
Second, it will result in the exhaustion of government resources.
However, such announcements by various political parties are only a medium of vote bank politics, since this step is fraught with mixed reviews within the same political party.