Universal basic income

Abstract

Universal Basic Income is a regular stream of cash provided by the government to all citizens of the country irrespective of their socio-economic status. In principle, there are three basic components of UBI, as follows: 1. Universality: The income should be provided to all and should not be targeted towards any specific community. 2. Individuality: The income should be allocated to individuals and not households. 3. Unconditionality: UBI is an unconditional cash transfer where the recipients are free to decide their spending. Universal Basic Income as an idea is not new and has been used by various economies across the world to justify various results. The idea started with the developed world where it is seen as a method of social security and providing a cushion to people who have lost jobs due to rapid expansion of technologies and robots and artificial intelligence. Parallelly, the idea is being tested in the developing economies as well, where most people advocate it as a means of eradicating poverty. Given the populism attached to the scheme and given that, the long-run effects of the idea of giving cash to the people especially over a wide geography is unclear, many randomised control trials have been conducted both in the developing and the developed world. The objectives with which each of these studies was set up was different and hence the parameters that these studies measure are also different. However, one general criticism that can be drawn from the studies is that they tend to prove the obvious. None of the studies are as wide-spread and performed on a homogenous population or are performed in a long run or performed in the true spirit of universality and unconditionality. In the Indian context, the idea of UBI gained impetus and became a topic of discourse among the wider academic circle after an article published in the Economic Survey of India by India’s chief economic advisor. The main objective of the idea was alleviation of poverty and protecting the vulnerable sections from economic shocks- an idea that also gets mirrored in the election promise of the main opposition and the oldest party of India, the Indian National Congress. Although there has been difference in the stated objective by some economists, many economists have talked in favour and opposition of the scheme. This paper analyses the basic principles and issues with the applicability of Universal Basic Income in Indian context. We believe that the Indian markets are not yet well developed to fully support the idea of universal basic income. Even if the markets were developed, there is a long way to go to ensure the access of markets and financial institutions to all the people of India. The sheer greatness of India in terms of huge geographies and population pose another challenge in imposition of a uniform income as the basic income for all. Even when all these hurdles are overcome, the pertinent issue of finding a place in the constrained fiscal budget of India for implementing this scheme is another issue that needs thought and research.