The UBI net
Mains Paper 5: Economy
Prelims level: Universal Basic Income
Mains level: Economic growth and development
- The Sikkim Democratic Front intends to make implementation of
Universal Basic Income (UBI) a key promise in its manifesto for the upcoming
assembly elections in April-May.
- The ruling party of India’s smallest state claims that it will
roll out the scheme fully by 2022.
Comparing UBI with other government schemes
- UBI has intrinsic appeal as well as advantages over normal welfare
- By providing every household a minimum income through
unconditional cash transfers, the beneficiaries of government programmes
cease to be subjects.
- Instead, they are seen as having agency and as being better placed
to take economic decisions in their own interest than an all-knowing state.
- A certain assured income also provides a safety net in a market
economy where job losses, health shocks or death of breadwinners can push
back families to below subsistence levels.
- UBI is, moreover, easy to implement, unlike anti-poverty schemes
that suffer errors both of exclusion (the deserving being left out) and
inclusion (the undeserving benefiting) even with the best of targeting.
- With Aadhaar-seeded bank accounts becoming ubiquitous, there’s
nothing simpler and less leakage-prone than transferring a predetermined sum
of money every month to everyone barring, say, households whose members file
income tax or have government jobs.
Where is the money to implement such a scheme?
- Even if two-thirds of India’s 30 crore-odd households were to be
given a Rs 1,000 monthly UBI, it would annually cost around Rs 2.4 lakh
- There could be savings through rationalisation of subsidies there
is definitely scope to raise the price of wheat and rice sold through the
public distribution system (PDS) from the current Rs 2-3/kg levels, besides
making farmers pay more for urea and scrapping of a majority of wasteful and
ineffective welfare schemes.
- However, these measures are easier said than done.
- The very fact that urea prices haven’t been raised since April
2010 and PDS grain is sold as cheap as almost two decades ago is proof that
any new scheme adds to, and doesn’t replace, the earlier ones.
- Sikkim’s fiscal and debt liabilities position is better than many
- It also has significant saleable surplus power, which, along with
revenues from tourism, can possibly fund a UBI for a just over six-lakh
- The same cannot be said for other states or even the Centre.
- The fiscal space to implement a new MGNREGA-scale programme is
much larger and simply non-existent today.
- It makes sense, if at all, to go in for a UBI in a calibrated
manner, starting with monthly pensions for all households having senior
citizens and pegging this at a minimum Rs 1,000.
- The UBI net can be gradually widened by giving beneficiaries the
choice of either availing it or continue with their existing entitlements.
- One wouldn’t be surprised to find more people, over time, opting
for money that they can spend as they see best.
Q.1) Which of the following can be the advantages of adopting Universal
1. It promotes equality by reducing poverty.
2. It promotes efficiency by reducing waste in government transfers
3. It opens up the possibility of flexibility in labour markets.
Select the correct answer using the code given below.
(a) 1 and 3 only
(b) 2 only
(c) 1 and 2 only
(d) 1, 2 and 3
Q.1) As an idea, Universal Basic Income has appeal and advantages over
normal welfare schemes. But where is the money? Critically examine the
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