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| Universal Basic Income |
Universal basic income (UBI) has become the topic of discussion in all over the world now. While the discussion in the West and developed world is led by the fear of loosing jobs due to Automation, but in developing countries UBI is a magical tool to eradicate poverty and inequality.
But ironically UBI is not a recent idea, rather it finds its origin in the 18th century. Tom Paine was the first known advocate of UBI.
UBI is an idea where everyone will be paid an unconditional sum of money periodically. UBI has three basic pillars Unconditionality, Universality and Agency.
It's universal i.e. it's applicable to everyone, setting aside their economic status whether poor or rich, employment status whether employed or unemployed, gender status whether Male or Female or Third Gender.
Arguments in Favour of UBI:
1. Eradicating Poverty and inequality:
At the time when British left India, nearly 70% of population were reeling under poverty but now it stands at 22% of population (according to Tendulkar Poverty Line). Though India has made remarkable progress in eradicating poverty since independence but it's not satisfied at all.
One of the major reasons why thousands of schemes sponsored by both central government and state government failed is because of the exclusion of the deserved persons and inclusion of undeserved ones.
As there is not an efficient system in place in identifying and targeting the deserved persons in our country, many people are still under poverty.
As UBI applies to everyone, it doesn't require any identification thus helping the government in eradicating poverty at a faster rate.
2. Increasing Administration's efficiency:
As there will be no welfare schemes as before, huge administration machinery used in running those schemes will be used in some other fields.
3. Mitigating Automation consequences:
As the world is fast entering into the era of 4th industrial revolution, the productivity of industries will be driven by Automation.
Most of the Human Labour will be of no use. As many people will loose their jobs due to Automation, the government can support them through UBI in terms of compensation.
4. Society's obligation to everyone:
In an ideal and just society, everyone should have access to basic income and a decent standard of living.The society should ensure the dignity of everyone.
5. Giving Economic independence to individual:
The government thinks that people are incapable of taking economic decisions of their life on their own. So government provides various types of assistance through welfare schemes. But all people who are under poverty don't have same requirements. One might require food, the other job and the another one shelter. So UBI will give them the leverage of taking economic decisions which they think best for their life.
6. Increasing bargaining power of Workers:
When a basic income for everyone is ensured, it will give people more bargaining power to do a job where their dignity is respected and they are paid well also.
7. Improving the mental health and physical health:
As the basic income is ensured for everyone, the people will not be under stress to find a job and to sustain it as well. More people are now suffering from mental illness due to work pressure. People will now spend more time in leisure, creative and sport activities thus improving their health and well-being.
Special case of India:
1. Addressing agrarian distress:
Rather announcing farm loan waiver which is very bad for the economy to address the farm crisis, political class could opt for UBI. When there is basic income for landless and marginal farmers, they will spend that money in diversifying their livelihood Income sources in areas which require less or no land.
2. Eliminating Poverty:
Government run various welfare schemes for economic upliftment of people under poverty. But economic status of an individual is inconsistent i.e. it changes with time. But our system doesn't seem to acknowledge that. A people might get into poverty due to crop loss, health hazards, natural hazards, etc. If the government provides basic income to everyone then this problem will get solved.
3. Eliminating regional disparity in social spending:
Many districts in India have a very high percentage of poverty while others have a low percentage of poverty. But those districts which are poor don't get more funds thereby continue to remain poor. UBI will do away with these problems.
Arguments against UBI:
1. Inspiration to work:
Many critics of UBI say that it will destroy the inspiration to work. If one's basic income is taken care of, one will not work and people will become lazy.
2. Spending on temptation goods:
People may not spend the money on education, health, skill development, etc. rather they may go for alcohol, tobacco products, gambling, etc.
3. Leading to Inflation:
As there will be a fixed amount of money at everyone, there will be high inflation which may affect the macroeconomic factors of the country.
The discussion on UBI got intensified in India when Economy Survey 2017 said in its report that UBI might not be feasible now but the time for serious discussion on it has come.
Let's find out the feasibility of UBI in India:
In 2017, Finance Minister Arun Jaitley said UBI isn't politically feasible now.
But is it really so?
Not at all.
How will India fund UBI?
1. Scraping wasteful schemes:
The central government is currently spending nearly 5% of country's GDP on its 950 welfare schemes. If we will add the spending of state government, the share of welfare schemes will be more.
Except some crucial schemes on education,health, nutrition, etc. other wasteful schemes should be scrapped. Let the individual decide how they will spend money for betterment of their lives.
2. Removing non-merit subsidies:
There are many subsidies like subsidy on petroleum, first class railway tickets, Aviation turbine fuel, etc. which should be removed thus helping to fund UBI.
3. Improving taxing ecosystem:
Government can impose tax on property, long term capital gains, etc. thereby funding UBI. Improving taxing ecosystem, taxing more people, making tax surveillance net more robust will help in raising the resources for UBI.
UBI is not just an idea now it is being implemented in various parts of different countries around the world. Various countries like Finland, Canada, Switzerland, etc. are experimenting with UBI.
Indian experiment on UBI:
Self-Employed women's association (SEWA) with the help of UNICEF has done experiment with UBI in Madhya Pradesh through 2 pilot projects.
In the first project everyone of 8 villages were given monthly payment of 200 rupees per adults and 100 rupees per child, later the amount was hiked to 300 rupees per adult and 150 rupees per child.
In the second project everyone in a tribal village was provided with a monthly payment of 300 rupees per adult and 150 rupees per child for 12 months.
Outcomes of those experiments:
1. Many used the money to make latrines, houses, wells thereby creating valuable assets.
2. Health conditions were improved due to more nutritious food consumption.
3. Many households moved from conventional energy sources to more clean energy sources.
4. Many used the money to open their small business and to diversify their farm income.
5. Contrast to the popular belief, people were more interested to work but they shifted from casual wage labour to self-employment.
6. There was reduction in bonded labour.
7. Due to availability of basic income, there were fewer people seeking debt thereby moving away from the viscous cycle of debt trap.
What's the way forward?
Though it looks promising but UBI doesn't seem to be feasible for India now. Many economists have suggested UBI for a small part of the population i.e. a Quasi-UBI. That would be good. Rather than making the Basic income universal which is not feasible at all, it can be rolled out let's say for 60% or 50% of population who earns less.
But if we are not making it universal then the same problem which is associated with our bureaucracy in implementing welfare schemes will be associated with the UBI also.
We can't exclude children from it. If we will do so, there will be high chances of fraudury in the age proof which will lead to more corruption.
Certainly there has not been enough study so far in India yet. We need more pilot projects backed by the government along with various organisations. More study will reveal more information on the feasibility and usefulness of UBI. We need to debate more on it.
Some news reports suggest that Sikkim might become the first indian state to adopt UBI. Provided Sikkim's small population,surplus energy in power sector and booming tourism sector, Sikkim could be the best place to implement UBI.
Looking at the future of automation, it seems that we are entering into a Marxist Utopian society in the post capitalist era. In this Utopian society people will spend more time on art, literature, creative activities, sports and with their loved ones as well.
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