UNIVERSAL BASIC INCOME

1. Context

Sikkim will be the first state in India to roll out the Universal Basic Income or UBI, with the ruling party Sikkim Democratic Front (SDF) including it in its manifesto ahead of the state’s Assembly election this year.

2. Universal Basic Income (UBI)

Universal Basic Income (UBI) is a social welfare program that aims to provide all citizens of a country with a regular and unconditional cash transfer from the government.
The concept of UBI has gained traction in recent years as a potential solution to address economic inequality, poverty, and unemployment in society.
Under this system, every individual, regardless of income, employment status, or wealth, would receive a fixed amount of money regularly.
Under a UBI program, all citizens, including children and the elderly, receive a fixed amount of money regularly, usually every month.
The payment is unconditional, meaning that individuals are not required to meet any specific criteria or work requirements to receive the income.
The amount of the UBI payment can vary depending on the country's economic conditions and the objectives of the program.

3. Significance of Universal Basic Income:

Poverty Reduction: One of the primary goals of UBI is to alleviate poverty by providing a basic level of financial security to all citizens. It ensures that every individual has access to a minimum standard of living, reducing the risk of extreme poverty and improving overall well-being.
Economic Stimulus: UBI can serve as an economic stimulus by putting more money directly into the hands of consumers. Increased consumer spending can lead to higher demand for goods and services, potentially boosting economic growth.
Job Displacement and Automation: With the rise of automation and advancements in technology, UBI has been proposed as a way to address potential job losses. By providing a regular income, individuals who lose their jobs due to automation can have a safety net while they seek new opportunities or reskill themselves.
Social Equality and Human Dignity: UBI promotes social equality by providing every citizen with the same basic income, regardless of their socio-economic background. It recognizes the inherent dignity of individuals and their right to a decent standard of living.
Streamlining Social Welfare Programs: UBI has the potential to simplify the existing complex welfare systems, reducing bureaucracy and administrative costs. By consolidating various means-tested programs, UBI can make social support more accessible and efficient.

4. Criticisms and Challenges of Universal Basic Income:

Cost and Funding: One of the main challenges of implementing UBI is its cost. Providing a regular income to every citizen requires significant financial resources, and funding such a program without negatively impacting the economy or burdening taxpayers is a major concern.
Inflationary Pressures: Critics argue that introducing UBI might lead to inflation, as increased consumer spending could drive up prices, reducing the purchasing power of the UBI payment.
Work Incentives: Some opponents of UBI fear that providing unconditional income might disincentivize people from working or seeking employment, potentially leading to a decline in labor force participation.
Targeting and Equity: Critics argue that UBI might not effectively target those who are most in need of financial assistance, as it provides the same amount to every citizen, including those who might not require additional support.
UBI Pilots and Experiments: Several countries and regions have conducted pilot projects and experiments to test the feasibility and impact of UBI. These experiments aim to gather data on the potential benefits and drawbacks of implementing such a program on a larger scale.

5. India’s Pilot Project, Madhya Pradesh

In 2011, SEWA, funded by UNICEF, conducted a pilot study of Universal Basic Income in 8 villages of Madhya Pradesh for 18 months.
Most villagers did not prefer subsidies (covering, Rice, wheat, kerosene, and sugar) as a result of the basic income experience. They Choose each transfer over subsidies.
Many people used the money to improve their housing infrastructure by building roofs and walls, toilets, etc.
This meant a reduced number of diseases emanating from dirty surroundings, which indirectly reduces their expenditure on fighting such diseases. It was also reported that nutrition levels improved, particularly among the Scheduled Castes (SCs) and the Scheduled Tribes (STs).

For Prelims: Universal Basic Income(UBI), United Nations International Children's Emergency Fund (UNICEF), Sikkim Democratic Front (SDF), and Self-employed Women Associations (SEWA).

For Mains: 1. Discuss the concept of Universal Basic Income (UBI) as a potential solution to address economic inequality and poverty. Evaluate its advantages and disadvantages in the context of a developing economy like India.(250 Words)

Previous year Questions

1. A recent radical idea to overcome the problem of poor targeting and misallocation of social welfare schemes is that of (APPSC Group 1 2017)

A. Universal Basic Income

B. Direct Beneficiary Transfer

C. Direct allocation of funds to Local Bodies

D. Privatization of all subsidy schemes

Answer: A

Source: The Indian Express

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