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Universal Basic Income: Is India Ready for Scheme Like UBI | UPSC Editorials

Last Updated on Sep 26, 2024
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India is facing multiple issues like jobless growth where output and labor productivity have increased without a corresponding rise in employment. Many nations have proposed the concept of a universal basic income (UBI). This idea since 2016 has gained popularity, particularly after the International Labour Organization (ILO) highlighted in its latest World Employment and Social Outlook that the decline in job growth and the rise in inequality are linked to increased automation and the use of artificial intelligence (AI).

Read more about Economic Growth & Development!

Analysis Based On

Article published in The Hindu on need for introducing Universal Basic Income

Topics for Prelims

Indian Economy, Labour Reforms, International Organization, Committees, Sustainable Development Goals (SDGs)

Topics for Mains

India’s Economic Development, Financial Inclusion, Poverty Reduction

Universal Basic Income (UBI)

Universal Basic Income (UBI) is a socio-economic reformative policy where all citizens receive a fixed, regular and unconditional sum of money from the state to fulfill their basic needs regardless of their income or employment status. This is known as Basic Safety Net.

In India we have different forms of Universal Basic Income like Direct Benefit Transfer (DBT), cash transfer schemes for vulnerable sections like farmers and women. Some state governments have extended this kind of benefit to unemployed youth as well.

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Need for Universal Basic Income (UBI)

These are the following need for Universal Basic Income:

  • Poverty Alleviation: Universal Basic Income can help in lifting people out of the vicious cycle of poverty by providing a monetary benefit and financial safety net. It ensures that basic needs of an individual are met.
  • Economic Stability: As per some renowned economists, providing consistent income benefits in the form of Universal Basic Income can stimulate local economies as it allows individuals to have more disposable income with them that they can spend on goods and services.
  • Job Automation: As this is an age of technology, the automation in the workplace continues to displace jobs, thus universal basic income (UBI) can serve as a buffer for people to upgrade their skills.
  • Promoting Culture of Entrepreneurship: A guaranteed income will enable people to become a job provider rather than a job seeker. In an economy, prosperity can be achieved if the culture of innovation is promoted.
  • Improved Health and Well-being: A sense of financial security can lead to better mental and physical well being, stress management and improving overall quality of life.
  • Bureaucracy Overhaul: Universal Basic Income can simplify various welfare schemes and remove inefficiencies.

Universal Basic Income as a Social Safety Net

In the early 1980s, different international institutions such as the World Bank cautioned that many Indians might be left behind and recommended the government to establish safety nets. This socialist approach was implemented in India in the late 2000s, in the form of welfare schemes (centrally sponsored scheme, central sector scheme) which grants rights such as Right to employment in the form of MGNREGA, 2005, Right to food by National Food Security Act, 2013 and Right to education (Right of Children to Free and Compulsory Education Act, 2009), and more.

Social safety nets are some kind of socialist measures which are non-contributory transfer programs and usually targeted towards the poor or weaker section of the society. This kind of concept in Europe is called social assistance. It was first mooted in 2016 by Switzerland. They put it to vote and about 77 percent of voters rejected the government’s plan to give monetary benefit in the form of 2,500 Swiss francs to each adult and 625 francs for each child under 18, regardless of their employment status.This was envisaged to fight poverty and remove the inequality that exist in their society and at the same time guarantee a “dignified” life to everyone.

In India there are many examples of welfare measures such as Right to Education under which free and compulsory education for children aged between six to fourteen years, Right to Work in the form of central government’s scheme such as MGNREGA. However, the situation is not the same in every state as some have stronger social security safety nets as compared to others.

However, it needs to be understood that merely providing monetary benefits in the form of monthly income without getting any work done won’t be economically feasible for any country. Therefore, providing employment is not only important but necessary. Otherwise, there might be chaos in the society which will ultimately create a divide in the society.

Way Forward

These are the following way forward for government to deal with the issue:

  • Private Sector Participation: Government has made its agenda clear that private industry should invest more in labor-intensive sectors.
  • Government Aid: Government needs to invest more in labor-intensive sectors. In fact the government has reduced the allocation in the labor-intensive sectors which generates a lot of employment especially social sectors such as education and health and in the rural employment guarantee scheme.
  • Need of Financial Resources: Before implementing Universal Basic Income, the government needs a sufficient amount of sustainable resources. It is possible to bridge the gap, if the government raises more funds from direct taxes and utilizes them for UBI purposes, otherwise it would become a fiscal nightmare for the government.

Conclusion

The concept of UBI offers a promising solution to address income inequality and jobless growth in India. However, careful consideration needs to be paid so that it is implemented in the right way. Apart from that country’ economic capabilities and social factors need to be taken into consideration while rationalizing other subsidies and schemes as it can create societal alienation among benefactors of UBI.

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