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What is UBI?
UBI is a social welfare proposal in which all citizens of a given population regularly receive a guaranteed income in the form of an unconditional transfer payment, without a means test or need to work. It would be received independently of any other income.In this scheme every adult citizen receives a set amount of money regularly. The goals of a basic income system are to alleviate poverty and replace other need-based social programs that potentially require greater bureaucratic involvement.
The goals of UBI are to alleviate poverty, reduce inequality, and provide economic security and freedom for all. The discussion on UBI is a never-ending topic. Former CEA Mr Arvind Subramanian had proposed it as a “conceptually appealing idea”
What are the advantages of UBI?
UBI reduces poverty and income inequality by providing a guaranteed income to all citizens, regardless of their earnings or employment status. For example, UBI trials in Brazil, Namibia and Kenya have shown positive effects on poverty reduction, food security, health etc.
UBI improves physical and mental health by enabling people to afford basic needs, access health care, improve sanitation, reduce stress, and enhance happiness and life satisfaction.
UBI provides individuals with financial security and greater freedom to make choices about their work, education, and personal lives.
UBI has led to increased school enrollment and attendance, and families have spent more time with their children.
It can drive economic growth as money is directly given in the hand of individuals. It can urge people to buy more, enhance local businesses and generate employment opportunities as well.
It promotes equality by reducing poverty.UBI also promotes many of the basic values of a society which respects all individuals as free and equal.It increases efficiency by reducing waste in government transfers and also promotes productivity.
What are the disadvantages of UBI?
It is too expensive and unsustainable for most countries, especially if it is set at a level that meets basic needs. UBI would requ-ire higher taxes, cuts in other public spending, or increased public debt.
It removes the incentive to work, adversely affecting the economy and leading to a labour and skills shortage.
◆ UBI could reduce work effort, productivity, and innovation, as well as increase depend- ency and complacency. It can lead to Inflationary tendencies.
It is socially unjust and unfair to the poor and the workers who contribute to society. It has the potential to reduce social solidarity and cohesion by weakening the link between rights and responsibilities.
UBI controls misallocation of welfare schemes and leakages. It is important to recognise that universal basic income will not diminish the need to build state capacity thus providing a range of public goods.
Are there any alternatives to UBI?
Universal Basic Services (UBS) – This is the idea of providing free or low-cost access to essential public services such as health care, education, transport, hous- ing, and digital communication.
Minimum Income Guarantee (MIG) – This is the idea of pro- viding a means-tested cash transfer to people whose income falls below a certain threshold. MIG aims to pre- vent extreme poverty and ensure a decent standard of living for all.
Direct Benefits Transfer (DBT) – Transfer cash or subsidies directly into the bank accounts of beneficiaries. Eg – PM Kisan, Jan Dhan Yojana etc. Other alternatives such as Conditional Cash Transfers, Employment Guarantee schemes, and providing skilling opportunities. Various blogs and post are avaiable in internet for furthur knowledge.
Issues in implementing UBI:
Difficulty in reducing existing subsidies to balance the resultant deficit.There is no guarantee that the given cash will be spent on productive activities, health & education, etc. It may be spent on tobacco, alcohol, drugs, and other luxury goods etc.
Free cash to the people will increase the rate of inflation in the economy.Workers can refuse to work as a labourer or demand higher wages which can increase the cost of production of agricultural goods.