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Universal Basic Income is one of the important topics in Economic Survey of year 2016 – 17. As complete one chapter is dedicated to UBI, why it is needed, how to implement it and what are the challenges faced in implementation.
So we will try to give you conceptual view of Universal Basic Income through this article. It will be helpful for the aspirants preparing for IAS.
Universal Basic Income/unconditional basic income/Citizen’s Income/basic income guarantee/basic income/universal demogrant is a form of social security payment in which all citizens or residents of a country receive an unconditional sum of money periodically, either from a government or some other public institution, in addition to any income received from elsewhere.
In UBI, Social or Economic positions of the individual will not be taken into consideration.
The Universal Basic Income concept has five main characteristics. They are as following:
As per UBI scheme in India, only those individuals with zero income will receive the full benefits in net terms. For those individuals, who earn additional income over the basic income, the net benefits will lessen through taxation. Therefore, even though the basic income will be universal, only the poor will receive the full benefits of UBI.
As UBI is a form of social security, it will help the government in reducing inequality and eliminating poverty, therefore, ensuring the security and dignity for all the individuals. As human labours are being substituted by technology, there will be less wage income and low purchasing power. UBI will thus compensate for reduced purchasing power.
At the present time, Government spends its revenue on different services as well as on subsidies. Providing UBI would mean that government may move away from service delivery and entitle its citizens to access services through cash transfer. There will be substantial changes in the government’s way of spending its revenue generated from taxation and other sources.
As per World Bank Report, there are only 20 ATMs for every one lakh adult population in India. About 1/3 of the Indian adults remain unbanked. With such a state of financial service infrastructure and financial inclusion, it will be difficult for the people to access their benefits through UBI.
Financing the assured basic income would be another challenge. There are chances that UBI might become as an add-on to existing subsidies rather than replacing them.
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JAM or Jan Dhan-Aadhaar-Mobile is a new scheme from the Government of India under which citizens are motivated to open a zero balance account and link their account to Aadhar Number. Currently, there are as many as 26.5 crore Jan Dhan accounts across the country which covers 21 percent of the country population. Of these 26.5 crores accounts, 57% are Aadhaar seeded. More than a billion Aadhaar cards have been distributed. When the trinity of Jan-Dhan, Aadhaar, and Mobile is fully adopted, a more efficient mode of delivery would be available. JAM system would be used to provide funds to each individual directly into his or her account.
The main problems in ‘JAM Trinity’ are as follows:
The Economic survey 2016-17 believe that in practice any program cannot strive for strict universality. So survey proposes some alternatives.
But, if any one of the above alternatives is implemented, it will also face the problem of ‘exclusion error’ in the identification of beneficiaries. Efficiency will be reduced. Most importantly, UBI will not remain ‘universal’.
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