Concept of “Universal Basic Income” in News

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The union government has unveiled a radical proposal to eliminate poverty – providing a universal basic income for all its citizens, while stressing that this is only a concept.

The idea was floated in annual economic survey 2017 that said guaranteeing a stipend to cover every individual’s basic needs would promote social justice.

Universal Basic Income is not a substitute for state capacity, it is a way of ensuring that state welfare transfers are more efficient so that the state can concentrate on other public goods.

The economic survey argued that a prerequisite for the success of Universal Basic Income is JAM (Jan Dhan accounts, Aadhaar and Mobile); the government would also have to address the key question of centre-state shares in funding of Universal Basic Income. The survey indicated that the Union government would have to negotiate with state governments to share funding of Universal Basic Income.

India spends billions of dollars on a rural work program that aims to ensure minimum employment for the poor and on subsidies such as food and fuel. The programs, however, have often been criticized for poor implementation, corruption, waste and very often failing to reach the intended beneficiaries.

A universal basic income, however, would be much more ambitious and expensive than the current poverty welfare programs and many economists say India simply does not have the resources for such an initiative. Even if the middle class and rich are excluded, it would have to cover more than a billion people. India has a population of 1.3 billion.

They say calculations in the survey show that ending the major subsidies for the poor would save 2.07 percent of GDP, but a universal basic income would need an outlay that would be more than double, amounting to 4.9 percent of GDP.

Some other countries are experimenting with the idea of a universal basic income – Finland has launched a trial program for unemployed residents. In Switzerland, voters rejected such a proposal last year.

The proponents of a basic income say every citizen has the right to a minimum income that ensures his or her basic needs; critics say it takes away the incentive to work.

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