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Universal Basic Income: Need of the Hour?

Universal Basic Income (hereafter referred to as ‘UBI’) essentially refers to the periodic transfer of funds in the form of cash to every citizen of the country by the government. It is built on the notion that each person deserves a guaranteed minimum income that can suffice basic needs to be able to live with dignity. With the main objective to enhance financial inclusion for persons from all sections of society, UBI has been a topic for discourse considering it a viable option since several years. This idea of providing money to all citizens – or, in some cases, to those who need it – is gaining momentum across the globe. Borrowed from the West, UBI has growing relevancy in the Indian perspective owing to the economic downfall due to the ongoing COVID-19 situation.


Organisations around the world like UNICEF and Self Employed Women’s Association (SEWA) have expressed active support to the UBI movement in India. This concept was first officially proposed in India in the Economic Survey of 2016-17[i] that aimed to “liberate citizens from paternalist and clientelist relationships with the state” by providing an annual bank transfer of Rs. 7620 to the bottom 75% of the population. This forty-page chapter on UBI outlined the 3 core themes of the proposed program: Universality, Unconditionality and Agency.


The then Chief Economic Advisor, Arvind Subramanian stated: “Universal Basic Income is a radical and compelling paradigm shift in thinking about both social justice and a productive economy. It could be to the twenty-first century what civil and political rights were to the twentieth.” This brought discourse around this concept back to the mainframe. Moreover, two important pilot program testing the impact and feasibility of UBI have been conducted by the government in New Delhi and Madhya Pradesh. Results of these experiments revealed better food security, regular medical treatments, increased productivity rates as well as improved financial stability in families that received the cash transfers.[ii]

POSITIVE EFFECTS OF UBI IN INDIA

The effects of a UBI scheme vary globally in terms of the impact it will have on the general public. For developed countries, UBI can be perceived as a method to aid in skill development whereas such a scheme will mainly aim to alleviate poverty and tackle underemployment in developing countries. India, a developing country, with increasing complications of job losses due to automation and advances in the IT sector as well as the reduction in agricultural efficiency owing to a multiplicity of reasons can greatly benefit from a UBI programme.


Poverty Eradication

An increasing number of people are going below the poverty line due to job losses.[iii] By providing every citizen with the bare minimum funds required to afford basic necessities to live with dignity, UBI will help alleviate the problem of poverty in India. Moreover, according to the UBI plan suggested by the Economic Survey of India 2016-17, poverty could be brought down from the existing 22% to 16%.


Tackle Underemployment

With the security of a guaranteed basic income, citizens will have greater freedom to choose jobs of their interest instead of having to continue working forcefully at a job they’re not wholly satisfied with. This will lead to a positive increase in productivity and innovation for the entire country as a whole.


Skill Development

With the provision of a safety net, the labour class is enabled to invest in bettering their skills that will ensure superior job opportunities. Additionally, this will also lead to a reduction in child labour that takes place by the sheer reason of poor circumstances.


Women Development

In rural areas, individual payments to women can help them gain a voice in the family and have a say in the household spending decisions. It also gives women the additional boost required.

All in all, despite the several negative aspects to a UBI scheme such as inflation or over-dependency, the positive aspects outweigh the negative ones and it is an ideal way to boost our economy.

NEED FOR UBI OWING TO COVID-19 PANDEMIC

In his book titled Utopia, Robert More, an English philosopher in the year 1516 spoke about the concept of minimum income for all. It was not until the 1960s that the economists realized the importance of the idea of UBI. The economists realized its importance only because of the necessity that has come in the form of recession, poverty, underemployment, etc. In the twenty-first century, 2020 will be marked as an ill-fated year for development. The COVID-19 pandemic has forced the governments to experiment with UBI without any guaranteed precedent.


The need for the experiment has come up as it is a well-known principle that the well-being of the citizens is the state’s responsibility. India, being the largest democracy, is looked up to by the whole world. If India wants to be a role model for other democracies, the ideal way to ameliorate the situation is to elevate the population that is below the poverty line. In the pandemic situation, daily wage labourers are restricted from doing any kind of work in a crowd or open places. The country went into a complete lock down in the month of April this year. Daily wagers and migrant workers were the most affected in this situation – they were not allowed to work in public places with physical contact.


Moreover, the poor could not afford the surging prices due to the decrease in production and increasing demand. Hence, the central government of India and the state governments had to transfer free minimum amounts directly to the accounts of the poor as required for a dignified life.[iv] Article 43 of the Constitution of India clearly specifies that it is the state’s responsibility to provide with a minimum living wage. There exists a Minimum Wages Act, the question, however, lies in its implementation.

CONCLUSION

UBI can tackle economic and social problems of a society such as poverty, unemployment, lack of basic skills, etc. To a certain extent, it can also promote education. In a developing country like India where a massive segment of society lives in poverty, education is always the least thought of in poor families. Poverty forces them to not promote education as it involves extra costs. Though the Indian Constitution promises free education, getting quality education is always a dream. Moreover, the lockdown is pushing up India’s poverty levels.


There may be many factors that discourage the concept of UBI. The main factors are that free money could make people lazy, if this concept will hurt the economy negatively if it is a long term idea or if the meaning of work in life will be lost. On the other hand, the positives from UBI would be that it reduces class differentiation, poverty, inequality, etc. In this COVID-19 pandemic situation, though UBI may have an adverse effect on the already declining economy in the short term, it will have several benefits in the future. Amid varied constraints and financial volatility, a large-scale, universal UBI scheme will help offset rising inequality, take care of basic needs as well as give the economy the boost it needs.


ENDNOTES [i]Economic Survey of India 2016-17: Chapter 9 (Universal Basic Income) https://www.indiabudget.gov.in/budget2017-2018/es2016-17/echap09.pdf [ii] Executive Summary of Madhya Pradesh Unconditional Cash Transfer Project https://sewabharat.org/wp-content/uploads/2015/07/Executive-summary.pdf [iii]Job Losses due to AI https://www.forbes.com/sites/cognitiveworld/2018/08/07/job-loss-from-ai-theres-more-to-fear/#73cf3dda23eb Loss of Jobs because of the Coronavirus Lockdown https://www.thehindu.com/data/data-over-12-crore-indians-lost-their-jobs-during-the coronavirus-lockdown-in-april/article31520715.ece

[iv] Bloomberg Quint Article https://www.bloombergquint.com/coronavirus-outbreak/what-india-has-released-from-its-rs-17-lakh-crore-relief-package-for-the-poor

ABOUT THE AUTHOR

This blog has been authored by Niti Gosrani, who is a 2nd year B.A., LL.B. (Hons.) student at Government Law College, Mumbai and Md. Faizan A. who is a 4th year B.A., LL.B. (Hons.) student at Damodaram Sanjivayya National Law University, Visakhapatnam.


[PUBLICATION NO. TLG_BLOG_20_8304]

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