Syllabus: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Context
- India’s wealth gap stretches to levels unseen since Independence; technology races ahead of policy causing crises.
- Job-shedding automation, gig economy precarity, climate-driven displacement, mental health issues from chronic insecurity mounting nationwide.
- Universal Basic Income (UBI) once dismissed as utopian deserves fresh, pragmatic look as urgent policy imperative.
About UBI
- Radical yet simple proposition: periodic, unconditional cash transfer to every citizen irrespective of income or employment status.
- Embeds dignity, autonomy, simplicity in design challenging rethinking of 21st-century welfare state provisions comprehensively.
Strengths
- Universality primary strength: anchors security in citizenship alone transforming social protection into rights-based pipeline resilient to shocks.
- Bypasses administrative complexities of targeted welfare; removes stigma associated with poverty-based entitlements ensuring dignity.
- Creates basic floor of income security ensuring no one left behind due to bureaucratic lapses or conditional access.
India’s Current Welfare
- Current welfare landscape though expansive remains fragmented and uneven; schemes suffer from leakage, duplication, exclusion significantly.
- UBI offers streamlining welfare delivery as digital infrastructure (Aadhaar, Direct Benefit Transfer) matures ensuring efficiency.
Need for UBI
- Economic Inequality
- PIB claimed India ranks fourth globally in income equality citing consumption-based Gini index masking true extent.
- World Inequality Database: India’s wealth inequality Gini: 75 (2023); top 1% owns 40% wealth, top 10% controls 77%.
- Concentration unseen since colonial times; GDP growth 8.4% (2023-24) failed translating into broad-based prosperity.
- Joseph Stiglitz argued: GDP doesn’t account for quality of life, environmental sustainability, equity showing disconnect.
- India ranks 126/137 in 2023 World Happiness Report behind Nepal, Bangladesh, Pakistan showing rising precarity.
- Automation Urgency
- McKinsey report: up to 800 million jobs worldwide could be displaced by 2030 due to automation threatening livelihoods.
- India’s semi-skilled, informal workforce especially vulnerable; UBI provides buffer during transition allowing upskilling and repositioning.
- Philosophical Case
- Structural antidote to populist, consumer-as-voter politics removing political incentive to dangle ad hoc freebies like power/loan waivers.
- Income security decoupled from partisan largesse empowering voters to judge governments on systemic outcomes: schools, law, ecology.
- Shifts relationship from consumerism to citizenship replacing paternal patronage with rights-based social contract comprehensively.
- Inflation Concerns
- Worries about price explosion do not match reality where such checks exist; big inflations from factory shutdowns and foreign debts.
- Fund UBI responsibly, keep shelves stocked becoming cushion against hardship, not spark for price hikes ensuring stability.
- UBI Impact
- Unconditional deposit means a gig-worker can buy vegetables, rickshaw driver’s child starts school with new shoes ensuring dignity.
- Chips away extreme concentration, reduces lure of one-off freebies, anchors growth in every kitchen not just spreadsheets.
- Evidence
- SEWA-led initiative (Madhya Pradesh 2011-13): UBI recipients experienced better nutrition, increased school attendance, higher earnings.
- International trials (Finland, Kenya, Iran) showed improved mental health, food security without reducing willingness to work.
Not a Panacea
- UBI not panacea: won’t create jobs, fix health systems, transform education outcomes by itself requiring complementary measures.
- Serves as base providing minimum economic security upon which individuals build lives of agency and aspiration.
- Recognizes unpaid labour especially care work by women invisible in traditional economic metrics valuing contributions.
- Funding Challenges
- Minimal UBI ₹7,620/person/year (poverty line) would cost around 5% of GDP requiring significant fiscal commitment.
- Funding requires: raising taxes, rationalizing subsidies, or increasing borrowing each with economic implications requiring careful planning.
- Universality could dilute redistributive intent allocating resources to affluent sections alongside poor needing targeted approach.
- Technological Challenges
- Key challenge: technological access; while Aadhaar, Jan Dhan expanded financial inclusion, gaps remain in digital literacy.
- Mobile access, bank connectivity gaps particularly in tribal, remote, underserved areas must be closed preventing exclusion.
Way Forward
- Phased Implementation
- Introduce UBI in phases: prioritize vulnerable groups (women, elderly, persons with disabilities, low-income workers) initially.
- Targeted rollout allows evaluation and infrastructure building before full-scale implementation ensuring smooth transition comprehensively.
- UBI complement rather than replace PDS, MGNREGA especially in early stages maintaining existing safety nets.
Q- What is Universal Basic Income (UBI)? Discuss how it differs from existing welfare schemes in India. (10 marks)