Universal Basic Income (UBI): Concept, Experiments, Features, Benefits, Challenges, and Scope in India
Introduction
Universal Basic Income (UBI) is a socio-economic policy under which all citizens receive a regular, unconditional sum of money from the government to meet their basic needs. It seeks to provide financial security and reduce poverty, irrespective of employment status or income level.
Global and Indian Experiments Similar to UBI
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Global Examples:
- Finland (2017-18): Conducted a UBI pilot, providing €560 per month to unemployed citizens. It aimed to test its impact on well-being and employment.
- Alaska Permanent Fund: Provides annual dividends to all residents from oil revenues, ensuring a minimum income for all.
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Indian Examples:
- Madhya Pradesh SEWA Experiment (2011-12): A pilot program in eight villages offered cash transfers to households, leading to improved nutrition, health, and education outcomes.
- PM-Kisan Scheme: Provides direct income support of ₹6,000 annually to small and marginal farmers, showcasing a targeted approach akin to UBI principles.
- Rythu Bandhu Scheme (Telangana): Offers ₹10,000 per acre annually to farmers, ensuring basic financial support.
Features of UBI
- Universality: Covers all citizens irrespective of income or employment.
- Unconditionality: No strings attached to receiving payments.
- Regular Payments: Provides a stable and predictable income.
- Direct Transfers: Reduces leakage and inefficiencies in traditional welfare programs.
Benefits of UBI
- Poverty Reduction: Ensures a safety net for the poor, reducing economic inequality.
- Administrative Simplicity: Streamlines welfare schemes by replacing multiple subsidies.
- Economic Empowerment: Encourages entrepreneurial activities and provides a cushion during financial instability.
- Social Justice: Promotes equity by addressing income gaps and ensuring dignified living standards.
- Reduction in Corruption: Direct transfers eliminate intermediaries, reducing chances of leakages.
Challenges Faced by UBI
- Fiscal Burden: Providing UBI to a large population like India’s would require significant resources, straining public finances.
- Moral Hazard: May discourage individuals from seeking employment.
- Targeting Dilemmas: Universality may result in affluent sections benefiting unnecessarily, undermining its equity objectives.
- Inflation Risks: Increased purchasing power could lead to demand-driven inflation.
- Subsidy Removal Impact: Replacing subsidies with UBI might negatively affect vulnerable sections like farmers or students.
Scope of UBI in India
- Pilot Implementation: Gradual rollout for specific vulnerable groups such as women, disabled individuals, or farmers.
- Complementary Role: UBI can coexist with targeted welfare programs, ensuring critical services like healthcare and education are not compromised.
- Digital Infrastructure: Platforms like Aadhaar and JAM Trinity (Jan Dhan-Aadhaar-Mobile) can enable effective delivery.
- Reallocation of Subsidies: Redirecting subsidies from inefficient schemes can partially fund UBI.
- Political Will: Building consensus among policymakers is crucial for implementation.
Conclusion
UBI represents a transformative idea that can address poverty and inequality while providing financial security. However, in a country like India, with its vast population and fiscal constraints, UBI’s implementation requires careful planning, phased deployment, and complementary reforms to maximize its potential.
