Universal Basic Income and the need for it now
What is universal basic income?
- A basic income is a regular, periodic cash payment delivered unconditionally to all citizens on an individual basis, without requirement of work or willingness to work.
- The five broad features of such schemes are:
- payments at periodic regular intervals (not one-off grants),
- payments in cash (not food vouchers or service coupons),
- payments to individuals,
- universality, and
- unconditionality (no prior condition)
How UBI works?
- UBI would require subsumption of other subsidies and allowances in order to free up resources so that a particular amount can be directed to people on a periodic basis.
Significance of Universal Basic Income:
- UBI envisages an uncompromised social safety net that seeks to assure a dignified life for everyone, a concept that is expected to gain traction in a global economy afflicted by uncertainties on account of globalisation, technological change,automation and now the COVID-19 pandemic.
- The 2017 Economic Survey had flagged the UBI scheme as “a conceptually appealing idea” and a possible alternative to social welfare programmes targeted at bringing down poverty.
- Economist Milton Friedman has said UBI as a way of restoring individual choice and freedom and reigning in the influence of the state.
Need for UBI:
- Challenges with fourth industrial revolution
Disruptive technologies like artificial intelligence ushers in productivity gains but steadily reduce human capital requirements.
For example, Silicon Valley region is home to five of the world’s eight most valuable companies. These companies have a cumulative market cap of over $4 trillion, yet they together directly employ just 1.2 million people.
- Tool to eradicate poverty
Economics Nobel Laureates Peter Diamond and Christopher Pissarides, and tech leaders Mark Zuckerberg and Elon Musk consider the universal basic income (UBI) programme to be a solution that could mitigate the developing crisis caused by reducing job opportunities and as an effective tool to eradicate poverty.
Why particularly now?
- The IMF has projected global growth in 2020 to be -3.0%, the worst since the Great Depression.
- India is projected to grow at 1.9% while the U.S. economy is expected to fall by 5.9% because of the effects of pandemic induced lockdown.
- With almost 90% of India’s workforce in the informal sector without minimum wages or social security, micro-level circumstances will be worse in India than anywhere else.
Global precedents
- Countries across the world, including Kenya, Brazil, Finland, and Switzerland, have bought into this concept and have begun controlling UBI pilots to supplement their population.
Conclusion:
- Thus it is high time for India to introduce unconditional regular payouts at maximum universality, at least till the economy normalises.
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