Question – UBI (Universal Basic Income) supporters claim that, no-strings-attached payments are a reasonable remedy for India’s underperforming antipoverty programs and leaky, distortionary subsidies. Please discuss.

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Question – UBI (Universal Basic Income) supporters claim that, no-strings-attached payments are a reasonable remedy for India's underperforming antipoverty programs and leaky, distortionary subsidies. Please discuss. – 9 April

Answer – 

Due to the ongoing lockdown to prevent the spread of the corona pandemic, all kinds of economic activities within the country have come to a standstill.In such a situation, India is still vulnerable to economic recession. In this hour of crisis employment in the country has ended at large-scale, as a result, people’s health and livelihood both are in danger.

Presently, the main challenge of the government is to maintain economic activities, giving priority to health.In such a situation, the scheme of universal basic income, which has been adopted by many advanced economies of the world, can prove to be an effective measure.

Universal Basic Income

UBI is a unconditional, periodic cash payment that is given to all irrespective of their contribution to the economy. UBI has the following 5 features:

  • Periodic (paid at regular intervals)
  • Cash payment
  • Individuals (not for households or families),
  • Universal (not only targeted) and Unconditional (irrespective of job prospects or income)

Benefits from Universal Basic Income:

  • At present government is ensuring the welfare of the people through various types of social public welfare schemes, but now the government wants to change this trend by providing them cash money, so that people can easily get the services / goods as per their own requirement.
  • In the midst of the ongoing economic crisis due to the epidemic, this scheme will provide additional purchasing power to the people of the country, which will give a boost to production and productive activities in the country.
  • The implementation of this scheme is relatively simple as there is no need to mark the beneficiaries. This scheme will reduce wastage and corruption of government money, as its implementation is very simple and the money given will be sent directly to the bank account of the beneficiaries.

Benefits of UBI scheme as compared to other social security schemes:

  • Will reduce administrative load: At present, there are around 950 central and centrally sponsored sub-schemes which constitute about 5% of the GDP in the budget allocation. Implementation of this type of scheme requires a comprehensive administrative mechanism.
  • Targeted welfare schemes, such as the ICDS and PDS, require extensive infrastructure investigation to identify beneficiaries and audit for the prevention from misuse received funds.However, delivery and monitoring of UBI as a collective will be simpler.
  • Personal freedom: It gives preference to the freedom to choose something different over the benefits currently being offered (subsidies, benefit transfers or others). It reduces poverty, promotes equality, reduces erosion in government transfers and increases efficiency.
  • Increase in Productivity: A 2011 study by UNICEF and SEWA in rural areas of Madhya Pradesh showed that the productivity growth of people was recorded when basic income was received. Whereas schemes like MGNREGA have come under scrutiny for failing to provide productive employment.
  • Credit arrangement and freedom of business: Unlike agricultural waiver schemes, UBI does not disrupt the credit system and does not restrict people to certain occupations (eg, a person must be an agriculturist to obtain farm-related benefit transfers at present).
  • Compared to farmer-centric planning, universal basic income remains more attractive because, it does not discriminate on the basis of occupation or ownership of land and does not depend on the accuracy of targeting to work.

The idea of basic income will be an important effort towards improving the quality of life of the Indian people, along with improving their health, education and other civic amenities. But a basic income is not possible for everyone until the subsidy being given through all the existing schemes is abolished.Therefore, instead of arranging basic income for all Indians, it seems far more effective and practical to arrange a fixed income for the most deprived sections of the society on the basis of socio-economic census.

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