Universal Basic Incom: Will make people lazy?

The past 30 years have been fundamental changes in the global economy
1.Huge concentration of wealth
2.Growing automation
3.Reducing number of regular jobs
4.More temporary jobs with no stability
5.Reduced chances of re-skilling effectively

There are real risk of social instability everywhere, as manifest in some political changes we see around us. The UBI is a response to this universal crisis!!

Some time ago, the Economic survey of India (prepared by ex-CEA Arvind Subeamanian) spoke of a UBI for citizens. WHAT IS UBI EXACTLY? The idea is that every man has a right to a basic income to cover needs, simply because the are citizens of India. Now, Sikkim is all set to launch it soon, on an unconditional and universal basis! The ruling party of Sikkim - Sikkim Democratic Front - has included it in the manifesto, and wants to launch by 022. they want to have unconditional cash transfer to citizens. The Economic Survey looked at UBI as an alternative to social welfare schemes aimed at poverty alleviation.

Who supports such ideas? Technically, both the left leaning and right leaning thinkers find good points in UBI.

Left-leaning- it fosters social justice and equal opportunity for citizens

Right-leaning- restores individual choice/freedom and rein in the state.

All those who find large scale welfare schemes wastful and not focused support this idea. State like  Finland (has already conducted a 2 years experiment on UBI's effect on unemployed people) and also Netherland's cities have launched muncipal level trials.

How UBI will work- Without the need to work or the desire to work a UBI offers periodic and regular direct cash payment to individual citizens. It works on five principles:-

1.Not one off grants but regular payment

2.No food voucher or service coupons etc, but direct cash transfer

3.Universally applicable

4.Payments made to individual citizens

5.Unconditional payments

So, to get the funds to run a UBI scheme, we need to focus on-

Scale of the peoject

Quantum of income (to be transferred)

Source of funding for UBI

Cuts in others subsidies, incomes and transfers 

The India case- Poverty in India has been reduced substantially from 1947 to 018, through several schemes. Tendulkar Committee estimates tell us that it went from 70% of population to 22% (in 2011-2012). Problems in schemes are- leakage, manipulation, exclusion, inefficiencies and corruption. A UBI system promises an compromised social safety net- a dignified lige for everyone.

Why appealing? Huge turbulence due to globalisaion, changes due to technology and automation.

Why Sikkim may be ideal? 

1.A surplus power generating stat, that exports 90% of 2.2GW hydel power.

2.Steady revenue stream, which may other state lack.

3.Literacy rate of 98%.

4.Very small below poverty line population(BPL).

  

All other schemes may be subsumed before any UBI is launched.

Practical problems in India

The income disparities may take it very tough to implement

-Sikkim is workable, but UP may not be

-Hence, World Bank's concept of "Progressive Universalism" - step by step.

In addition, some conditional access is needed to ensure priority for the lowest earners.

Risks: Big schemes like Mid-Day Meal, PMGSY. NHM, PMAY, SSA, MGNREGS, PDS can't be simply scrapped. What will replace the service? Only cash transfer may not be any guarantee that service will be available too.

Relevant For India? 

1.Yes, if social welfare schemes run along with UBI and not as an alternative.

2.India's poverty line is flawed. it excludes many who are in need of it. So the UBI in India should be universal and not only for LIG.

3.The govt. gas failed to increase the pension amount for the beneficiaries of the pension schemes. from merely Rs 200 to Rs 500 must be done.

4.A thorough study and rectification of poverty line is must. 

SUMMARY 

The GOOD-

1.Exclusion errors will be minimal.

2.Beneficiaries have cash to spend rationally as per personal choice.

3.Poverty directly is reduced through cash transfer.

4.Schemes end, so administrative efficiency goes up.

The BAD

1.Inclusion errors can be high (the affluent are included)

2.Moral hazard of people becoming lazy and inefficient.

3.Gender disparities may mean men controlling spending.

4.Market dynamics may (increase or) decrease the spending power of cash.