Why Universal Basic Income

The idea of a Universal Basic Income has been mooted for quite some time across the globe in various forums. So much so that such an idea has entered the public discourse frequently and even the average Joe has an opinion about whether it must be implemented or not. Universal Basic Income or UBI is a form of social security in which all citizens of a country are assured a fixed basic income regardless of their economic or social status.

The recently concluded Economic Survey by the Indian Finance Ministry dedicated a chapter to UBI in which Chief Economic Adviser Arvind Subramaniam talks about deliberating on UBI in India. The fact is that UBI is not new for India. A trial has been successfully conducted in rural Madhya Pradesh. The results so far have been encouraging. Yet, to implement the scheme on a nationwide basis remains a humongous challenge.

For starters, India already has more than 1000 public welfare schemes run under the aegis of both the central and state governments. Although several of these schemes are running inefficiently, abolishing them will be political suicide, even for a politician as popular as Narendra Modi. UBI can only work if these other welfare schemes and subsidies are abolished in favor of the universal income. In the Economic Survey, Arvind Subramaniam suggests a level of $9 per month for every adult Indian as the ideal level for a universal income which amounts to roughly Rs. 600 per month per individual. Subramaniam suggests that this amount, equivalent to roughly 5% of the GDP can be recouped by re-routing money from the numerous welfare schemes.

This brings us to the next problem i.e. should the income really be universal? What sense does it make to pay a destitute homeless man the same amount as is paid to Mukesh Ambani. In fact why even include the numerous people like Mukesh Ambani in the scheme at all? Don’t worry, Subramaniam has you covered. As per his calculations, only about 75% of the populace will be covered under ‘Universal’ Basic Income. However, the Indian state has been historically poor in identifying and separating the poor and needy from the well-off. This has been the chief reason for the failure of the numerous welfare schemes, apart from rampant corruption and red-tape of course.

Yet another argument against UBI is that it promotes laziness or disincentivises hard work. However, one can safely assume that a basic income of Rs. 600 per month is not enough for sustenance but still may be enough to abolish all subsidies and yet ensure that the poor can afford the basic necessities. Several arguments were put forth that such an income might be wasted away on alcohol and gambling. On the contrary, in the trial held in Madhya Pradesh, it was observed that such an income actually empowered women instead of it being a source of misuse in the hands of the menfolk.

The chief benefit of UBI though will be that it would enable the nation to pull a majority of its poor above the poverty line. This achievement is superior to what the governments in the past 70 years since independence have been able to do. On top of that, it ensures that the government’s welfare spending suffers no leakages, thanks to an almost universal Aadhar coverage. The only logistical upgrade required would be an easy access to banking services or greater penetration of digital payments.

By putting money directly into the hands of the needy, the government is eliminating scope for leakage and corruption. It also eliminates the paternalistic role of the government in which it assumed that people were incapable of making decision as to what should they do with their money. The government effectively hands over this responsibility to each and every individual thereby promoting greater freedom and less interference.

UBI promises to be a revolutionary idea, yet it is the immaturity of Indian politics that prevents us from implementing this idea. Such a revolutionary step is bound to ruffle the opposition’s feathers. There are several interest groups who will be negatively affected and who may make it their life’s mission to see that such a step is never implemented. All that matters is the will of the ruling party to implement such a step and for the people to give the government some time before they can reap the benefits of such a bold policy decision.