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Universal Basic Income in India Research Team | Posted On Thursday, January 31,2019, 05:21 PM

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Universal Basic Income in India



Today’s talk in Political Circles across the country is Universal Basic Income or UBI. This is a minimum income for every poor person in India. Universal Basic Income guarantees a threshold amount (fixed minimum amount) to every citizen of India, whether he/she works or not. Can this work or is it just a political gimmick?

The idea of Universal Basic Income originated in the so-called Utopian Socialists. The opposition party has promised UBI if it comes to power. The Government has dismissed UBI as fool’s talk with the question being, where will the money come from?

There is speculation that the Modi Government might introduce Universal Basic Income in the last pre-election budget. However, this might still not be a possibility.

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Universal Basic Income in India

Why universal basic income?

  • UBI encourages people to work as they seek additional income.
  • UBI increases bargaining power for workers as they say No, to exploitative labor.
  • UBI helps people as they focus on more important matters.
  • UBI improves physical health as you have access to foods high in nutrients and enjoy economic security.
  • UBI improves relationships, reducing domestic violence, child abuse, financial stresses and other sources of conflict.

How UBI works?

Under UBI, the Government will give an annual lump sum amount to every poor rural household in India. This could alleviate poverty as this money is spent to bring the poor out of poverty. The idea is an annual transfer of Rs 1,500 a month to eligible households.

The transfer could be made on the lines of Direct Benefit Transfer or DBT, where bank accounts are linked to Aadhaar and money is transferred to beneficiary’s bank accounts. This eliminates pilferage or the money being diverted. The richest 25% households would be excluded.

What UBI means to the Government?

Many people believe that if the Government dishes out the universal basic income, it could win the 2019 elections. This would counter Congress farm loan waivers. The BJP recently lost elections in 3 States because Congress promised loan waivers.

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Universal Basic Income Pros and Cons

Let’s take a look at a few cons of UBI:

  • Many Indians are not willing to give up benefits like existing subsidies for uncertain cash transfers.
  • UBI would focus only on rural areas. With high joblessness in urban areas, it’s just a matter of time, before they demand cash transfers under UBI.
  • The cost of UBI is 1.3% of gross domestic product (GDP). Where would the money come for UBI?

A few pros of UBI:

  • UBI could be made efficient with direct bank account transfers.
  • It could reduce poverty in India.
  • It could promote financial inclusion as more rural people open bank accounts.
  • UBI could help in women empowerment as money brings greater say in family matters.

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Universal Basic Income Countries:

Finland launched a trial version of UBI in 2017, where 2,000 unemployed people would receive 560 Euros each month for two years. The Finnish Government hopes this reduces bureaucracy in the existing welfare system. Finland has decided to end its experiment with UBI in 2 years. Experiments on universal basic income are underway in Kenya, Iran, Canada, Nederlands and USA.

UBI is all about give a man a fish and he will eat for a day. Give a man a fishing rod and he will eat for a lifetime. But, there must be fish in the river….

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