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Universal
Basic Income (UBI), as suggested in the Economic Survey 2017, is premised on
the idea that a just society needs to guarantee to everyone a minimum income
which they can count on, and which provides the necessary material foundation
for a life with access to basic goods and a life of dignity. It requires that every
person should have a right to a basic income to cover their needs, just by being
citizens. There are three features of UBI that are worth noting. First, it is
universal and not targeted at the poor alone, thereby removing the numerous
problems associated with means-testing. Second, as it is a cash transfer, there
is no need to provide in-kind transfers or subsidies, both of which come with
inefficiencies that interfere with market forces. Third, it is unconditional,
so that it is not contingent on the recipients conforming to stipulated norms
of behaviour.

The
opponents of UBI pose questions on implementation of such a scheme in a country
like India with a below poverty line population of 21.9%. The estimates for
implementing UBI vary from roughly 4.9% of GDP to 11% of GDP at a target
quasi-universality rate of 75 percent. These figures indicate how expensive UBI
is as a scheme to implement. To cover these costs, government would have to
stop all centrally sponsored schemes. The Centrally Sponsored and Central
Sector Sub-schemes by Budget Allocation costed about 5.2% of GDP in 2016-17. The
Economic Survey 2017 rationalises the UBI on the premise that if all the poverty
alleviation schemes are subsumed into one UBI, the funding for it would be
taken care of. Coupled with the linkage with Aadhar and Direct Benefit
Transfer, it shall reduce the administrative costs of running these schemes and
leakages in the system.

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However,
there is a fundamental flaw in this approach as most of the Centrally Sponsored
and Central Sector Sub-schemes relate to the expenditure on well-being of the
socially deprived classes. These various poverty alleviation schemes constitute
only a small portion of the Budget Allocation; MGNREGA makes up only about 0.3%
of GDP. Moreover, there is all likelihood of diversion of UBI received in the
hands of the BPL individual getting utilized largely on food or by men, thereby
depriving the women and children of health and developmental benefits; which
are currently being targeted at them under the schemes.

UBI,
as only a form of “free donation” to each targeted individual with no
favourable returns is undesirable for a young society (41% of the population is
under 20 years of age) of a developing country like India. It does not
contribute to building a socially responsible population, which needs to learn
to take care of have-nots. 

MGNREGA
considers the fundamental right to work and motivates to live a life of dignity
besides creating national assets. As per data collected in 2014-15, almost 47%
of the total work covered by MGNREGA was given to SC/ST families and about half
of the workers were women. It is providing livelihood to those communities that
have been marginalised in the society.

Providing
women with an incentive to work makes them empowered and further helps them in
formation of financial management groups like SHGs. Also, due to its equal-pay policy
to both the genders, women are being paid higher wages than before. Under a
private contractor, a woman would earn about Rs 30, whereas, a man would earn
about Rs 45. Under MGNREGA, however, both the genders earn about Rs 90 per day.
This step to overcome the social injustices faced by backward communities and
women, is something that UBI may never be able to do.

Other
centrally sponsored schemes like Janani Suraksha Yojana, meet the cash
requisites of delivering mothers (under BPL). This scheme also encourages poor
families to visit healthcare institutions during delivery, thereby reducing the
risk of infection and death for both mother and the infant. This scheme is
necessary in a country like India, where, 5 women die every hour during
childbirth.

Centrally
sponsored schemes are forms of public investments that help in upliftment of
the poor, provide them with better employment opportunities, and improve their
standards of living. UBI, in their midst, seems like a “leap of faith” and an
extremely expensive bet, with no guaranteed impact for improving the conditions
of the under-privileged sections of the society.

Another major problem with UBI is that it
may adversely affect work incentives, given the unconditional nature of cash
transfers. On the other hand, having a work requirement creates a
self-selection advantage for workfare programmes (you receive welfare only if
you work), since only the people needing the most would be willing to do hard
manual work. For this, MGNREGA looks a lot more appealing than UBI. Therefore,
rather than looking for magic bullets like UBI, a menu of options on the table
are required to achieve the objective.

The problem with replacing India’s
centrally sponsored schemes with UBI is that it will leave various other issues
unexplored. The question of justice should not only be the amount that may be
given as basic income to every citizen. Rather, the objective must be that of a
society based on a just return to labour, or fair wage. To live in a fair and
just society, the idea should be to formulate more ambitious objectives which
cover the distribution of income and wealth in its entirety and, consequently,
the distribution of access to power and opportunities. To move in this
direction, we must re-think on a set of institutions and policies which
interact with each other; public services like health, education, labour laws,
and tax system.

 

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