Login With Google
Universal Basic Income
Why is it in news?
- In Kenya’s Siaya County, a cash handout known as “universal basic income” has been introduced.
- It’s part of a large, intensive, multi-year study aimed at discovering a new way to end poverty in Africa.
UBI
- Economic Survey for the year 2016-17 has an entire chapter dedicated to the discussion on Universal Basic Income (UBI).
- Universal Basic Income is a periodic, unconditional cash transfer to every citizen in the country.
- Here, social or economic positions of the individual are not taken into consideration.
- The concept of universal basic income has three main features. They are as following:
- UBI is universal in nature. It means UBI is not targeted.
- The second feature of UBI is cash transfer instead of in-kind transfer.
- The third feature is that UBI is unconditional. That means one need not prove his or her unemployment status or socio-economic identity to be eligible for UBI.
Challenges in implementation of UBI
- According to World Bank, in India, there are only 20 ATMs for every one lakh adult population.
- Nearly one-third of the Indian adults remain unbanked.
- With such a state of financial service infrastructure and financial inclusion, it would be difficult for the people to access their benefits.
- Financing the ‘guaranteed minimum income’ would be another challenge.
- There are chances that UBI would become an add-on to existing subsidies rather than replace them.
What Economic Survey 2016-17 says about UBI?
- The Economic survey 2016-17 assumes that in practice any program cannot strive for strict universality. So survey proposes some alternatives-
- First, survey targets bottom 75 percent of the population and this is termed as ‘quasi-universality’’. The cost for this quasi-universality is estimated to be around 4.9 percent of GDP.
- Second alternative targets women, who generally face worse prospects in employment opportunities, education, health or financial inclusion. A UBI for women can reduce the fiscal cost of providing a UBI to about half. Giving money to women also reduces the concerns of money being used on ‘temptation goods’.
- Third, to start with a UBI for certain vulnerable groups such as widows, pregnant mothers, the old and the infirm.
- But, if any one of the above alternatives is adopted, it will also face the problem of ‘exclusion error’ in the identification of beneficiaries.
- Efficiency will be reduced. Corruption will creep in. More importantly, UBI will not remain ‘universal’.
Source
The Hindu, Economic survey-2016-17