Sikkim recently declared to include the Universal Basic Income scheme in its manifesto ahead of the Assembly election in 2019 and aims to implement it by 2022. If everything goes according to the plan, it will be the first state to implement UBI in India.
What is Universal Basic Income
A basic income is a periodic cash payment unconditionally delivered to all on an individual basis, without means test or work requirement. Considered a viable way to reform social security to address the shortcomings that the current system is rife with – targeting and delivery – the main motive behind UBI is to address the behavioural, design, and implementation downsides in the currently used systems of unemployment and social security benefits.
Why the UBI is a good idea?
Several countries have conducted pilot studies to explore the feasibility of making basic income a social security mainstay. Most notably, the Finnish government implemented a 24-month pilot in January 2017. In his article on UBI and initial observations from the pilot, the Guardian columnist Aditya Chakrabortty discusses how UBI’s potential rests on it being unconditional. By guaranteeing some income periodically, it liberates the recipients to pursue work they find meaningful, which in turns results in better economic outcomes.
Canada and Netherlands have also launched UBI pilots in early 2017, both as a social security measure and as an alternative to developmental aid. These examples are from the developed world. What about the developing world like india?
Can basic income work in India?
The Economic Survey of India 2016-17 discussed UBI as a viable alternative to a plethora of state subsidies targeting poverty alleviation. According to the ESI, if we considered a basic income transfer of INR1000 per month (approximately $15/month), we would have 20 million beneficiaries. Even a basic income of $4 per individual per month can reduce India’s poverty level by 16%, from its current level of 22%. The cost to do this would be 2% of GDP, the same amount we currently spend in total on food, fuel, and fertiliser subsidies. In early 2017 when the then Chief Economic Advisor to the Government of India, Dr. Arvind Subramanian, included a substantial chapter [2] on UBI in his annual Economic Survey (2016-17) which was presented to the Indian Parliament.
Economists feel the basic income should be fixed at a level that is just above the poverty line in a country. In India, various panels, including the Rangarajan committee, have fixed this level at between Rs 32 and Rs 47.
An 18-month basic income trial was conducted in Madhya Pradesh in 2010. Every man, woman, and child across 8 villages received a monthly cash transfer, while another village was used as a control group. The money was paid individually, initially as cash, and after three months was debited into their bank or cooperative accounts, without any conditions.
For a detailed post on how UBI will affect Indian citizens, read this post : Thoughts on Universal Basic Income
UBI potentially solves the pressing issues faced by social security in India. By virtue of being universal, it eliminates any risk of leakage. By leveraging the JanDhan-Aadhar-Mobile (JAM) trinity, UBI can ensure efficient delivery. More importantly, UBI is targeted individually, making it a social security measure that could reach even the most marginalised sections of the population.
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