Universal Basic Income: An Idea whose Time has Come

 


In the Parliamentary general elections of India in 2019, the Indian National Congress included in its manifesto one extremely populist scheme called The Nyuntam Aay Yojana (The Minimum Income Scheme)or NYAY. Congress party promised that if voted to power, it will enact a law under which it will distribute cash to 20 percent of India's poorest families as a minimum guarantee programme. All the households will receive up to ₹72,000 a year. Around 50 million families, or nearly 250 million people would have been benefitted by this scheme. This scheme was applicable if the average household income were less than ₹12,000 per month. It would have costed India Rs 3-4 trillion a year, or about 2% of its Gross Domestic Product (GDP). This scheme was to replace various social welfare schemes presently being run by the governments.

 

India is not the only country in the world to consider a minimum income for its citizens. The concept of Universal Basic Income (UBI) is a hotly debated topic around the world. The idea of UBI is getting support by noted international business leaders like Mark Zuckerberg, Stephen Hawking, Elon Musk and Bernie Sanders. UBI is also getting support from the political parties of different ideologies. The leftist parties believe that it will reduce poverty and inequality while the right-wingers hope single payments will allow for more efficient welfare systems.

 

Mahatma Gandhi once said, "The world has enough for everyone's needs, but not everyone's greed." However, greed is natural to man. The more one gets, the more one desires in life. As soon as the need of a person is satisfied, it increases the greed and the person seeks for more. According to the Oxfam study conducted recently, the richest top one percent of the world owns more than half of the world’s wealth. As a matter of fact, the 26 richest people on earth in 2018 had the same net worth as the poorest half of the world’s population, some 3.8 billion people. Despite the development and prosperity of the human race in general, it also remains a fact that billions of people in the world still live below the poverty line and can’t afford enough meals to fill their stomach.

 

It would be unbecoming of civilized society to let people die of hunger and malnutrition simply because they could not find a job. In order to ensure that the poorest section of the society gets the right to a dignified life, various social welfare schemes havebeen started by various governments and non- governmental organisations (NGOs) all around the world. In some schemes, the poor are given free ration while in others, they are provided items of necessity at subsidized price. For example, in India, the farmers are given fertilizers at subsidized rates and they are also provided subsidy on loans. In addition, there are various social security schemes to take care of the poor. For example, the poor in India are provided free gas connections under PM Ujwala Scheme and provided funds to build their own houses under PM Awas Yojana. They are also given free education and health benefits by the governments under various schemes.

 

There are hundreds of such social welfare schemes sponsored by the governments at the centre and state levels. However, despite all these schemes, the poor are still suffering and are unable to come out of their state of extreme poverty. India, which is one of the fastest growing economies of the world, can’t ignore the plight of the poor in the country. Any democratically elected government has to provide every citizen a right to live and live with dignity. 

 



UBI is a governmental public program for a periodic payment delivered to all on an individual basis without a means, test or work requirement. The UBI would be unconditional, automatic and given as a right; and would be sufficient to meet a person's basic needs. The need of universal income is now a hot topic of discussion across the globe since the growth of the economies is not leading to the growth of jobs for the growing population. As a matter of fact, the job opportunities are diminishing across the globe due to rapid automation in the factories and robotization. The use of Artificial Intelligence (AI), data mining, etc., in the service sector, is drastically reducing the need of manpower as machines are able to perform many functions with greater efficiency and lower costs as compared to human beings. These trends are likely to continue and the problem of job scarcity is likely to become only graver with time. Hence, even the developed countries are experimenting with the idea of universal income to ensure at least bare living condition to all the citizens of their nation.

 

One such universal income program was started in Finland in January 2017. A random sample of 2,000 unemployed people aged 25 to 58 was paid €560 monthly without any condition to seek or accept work. Recipients who got jobs continued to receive the same amount. Their feedback was compared with unemployed people with similar demographics. The pilot ended in December 2018, without conclusive findings, though the official report is yet to be released. The recipients, however, said they felt less stressed. Similarly, in Canada’s Ontario province, an ongoing project gives some 4,000 people basic income payments for up to three years. The scheme provides Canadian $16,989 per year for a single person, less 50% of any earned income, and Canadian $24,027 a year for a couple, less 50% of any earned income. The result of this experiment is also awaited. Even a developing country like Kenya is experimenting with universal basic income (UBI) of $0.75 per adult per day and Iran has implemented a nationwide unconditional cash transfer program. There are many other countries in the world who are toying with the idea of providing universal income to their citizens.

 

The advocates of UBI argue that providing universal income is simple and efficient. In the present era, the government can transfer the money directly in the account of the beneficiary without any scope for corruption or delay. Once poor people get a regular income sufficient enough to live above poverty line, poverty is immediately eliminated in the nation. Hence, it is considered to be the best way to end poverty. Moreover, it’ll help society cope up with a coming era of automation-induced joblessness.

 

Studies have shown that universal income boosts happiness, health and school attendance; and increases trust in social institutions. It has also been found that there is a considerable reduction of crime, if the people get guaranteed income to take care of their needs.

 

However, the critics of UBI argue that universal scheme is unaffordable to most countries, especially the developing countries. In order to raise money for UBI scheme, the government is bound to raise taxes on those who are creating wealth for the country. Those people are likely to resent government for taxing them more to give out UBI. Moreover, if people get income without doing anything anywhere, it is bound to increase monotony in their life as they have nothing productive to do. It may also disincentivise work and reduce productivity of the nation as many people would prefer not to work at all and live on taxpayers’ money. It is also true that when we don’t have work, we fail to contribute to the society and to give life a meaning. On the other hand, when we are engaged in productive work, we not only get income, but also job satisfaction that increases our happiness.

 

It is thus evident that the UBI scheme is promising if implemented with care and caution. It is a more efficient way to eliminate poverty than targeted subsidies, which are prone to corruption and misuse. Moreover, the needs and priorities of different families are different and the government must not decide what type of needs they may like to fulfill. Some people may spend the cash on education, while others may spend on food. It is very much possible that some people will spend their money on drinking alcohol or consuming other intoxicants; yet it would be reasonable to assume that most people would spend their money in the prudent way to overcome their poverty, get good education and make a better life for themselves.

 

It would, therefore, be a good idea to implement the idea of universal income first on a pilot basis to test its efficacy before implementing it on a pan India level. It can effectively remove poverty and ensure inclusive growth in the society. 



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