Universal Basic Income

In News

West Bengal Chief Minister Mamata Banerjee mentioned the Universal Basic Income for every family in her released Party manifesto for the 2021 Assembly election.

About

• Under the income scheme, all the 1.6 crore families under the general category will get ?500 a month and the Scheduled Castes and Scheduled Tribes population ?1,000 a month.
• The direct transfers will be in the name of the women head of the family.

What is Universal Basic Income (UBI)?

• A basic income is an income unconditionally granted to all citizens on an individual basis, without means test or work requirement.
• It is a form of minimum income guarantee that is being paid irrespective of any income from other sources.
• Components: It have three components:
  • Universality: UBI for all
  • Unconditionality: UBI without any conditions.
  • Agency: UBI can make a citizen move away from being a subject of government welfare programmes to agents of its own change.

Significance

• It will guarantee to each individual a minimum income for a dignified life with access to basic goods.
• The payments could help stabilize the economy during recessionary periods.
• It will promote social justice by reducing poverty.
• Increase the purchasing power of every poor which will further increase aggregate demand.
• Easy to implement because no identification of the beneficiary is involved.
• Reduce the wastage of government money because its implementation is very simple.

Supporters of the UBI programme

• The 2016-17 Economic Survey and the International Monetary Fund (IMF) had proposed UBI as an effective means of alleviating poverty and hunger.
• Other Supporters of the UBI programme include Economics Nobel Laureates Peter Diamond and Christopher Pissarides, and tech leaders Mark Zuckerberg and Elon Musk.
• Countries across the world, including Kenya, Brazil, Finland, and Switzerland have begun controlled UBI projects to supplement their population.

Challenges of UBI

• Disincentivization to the work and the work productivity may decrease.
• It can cause more social problems like more alcohol consumption, tobacco consumption etc.
• Inflation could be triggered because of the increase in demand for goods and services.

Suggestions

• UBI should be made universal first across easily identifiable vulnerable groups like widows, old, pregnant women etc.

Source: TH