Relevance : GS Paper II (Development and Welfare)
Why has this issue cropped up?
The idea of a universal basic income (UBI) is gaining ground globally.
What is UBI ?
It requires the government to pay every citizen a fixed amount of money on a regular basis and without any conditionalities.
Why a UBI ?
Millions of people remain unemployed and are extremely poor.
Limited Version of UBI
Govt has unfolded a limited version of the UBI in the form of the PM-KISAN.
Where will UBI Work ?
- It is not a substitute for basic public services.
- There is need to transfer money only to extremely poor such as landless labourers, agricultural workers and marginal farmers.
How the Above Groups  are at Disadvantage?
- Institutional credits for these groups are very low.
- They have to borrow from moneylenders at exorbitant interest rates.
- Benefits of subsidised fertilizers and power do not reach
- Automation of low-skill jobs and formalisation of the retail sector have redered them jobless.
How can UBI Help these Groups?
- An income support can be a good supplement to their livelihoods.
- This additional income can reduce the incidence of indebtedness.
- Can improve nutrient intake and increase enrolment and school attendance.
- Improved health and educational outcomes and hence a more productive workforce.
- It will reduce income inequalities.
- Increased demand due to increased income will promote economic activities in rural areas.
Can UBI Discourage Beneficiaries from Seeking Work?
The income support suggested above is not too large to discourage beneficiaries from seeking work.
Can UBI Replace Basic Services?
UBI will deliver the benefits only if it comes on top of public services such as health and education.
How to Make UBI Effective?
- transfer the money into the bank accounts of women.
- Budgetary allocation for basic services should be raised significantly.
- Programmes such as MGNREGS should also stay.
- It will have to be restricted to the poorest of poor households.
- Aadhaar can be used to rule out duplications and perform updation.
- The tax kitty can be expanded by reintroducing wealth tax.
- The cost of UBI will have to be shared by States.
Conclusion
The income transfer scheme is costly but poverty is much higher.
