Universal Basic Income :Explained
The concept of basic income is not new to the socialist world and the policy makers and economists promoting the welfare approach. Basic income was discussed as early as 16th century by Thomas More who suggested it to be an unconditional universal basic income for all adults regardless of other income sources. Recently in the 20th century as well, Nobel Laureate Bertrand Russell emphasised on a basic income important for basic necessities.
What is it?
Basic income refers to a minimum income which can provide for basic necessities sufficiently for all. It should be given to all irrespective of their employment status. Additionally, even post education if a person is not employed, he / she should be given the basic income.
The world over, policymakers from various advanced countries are considering to include basic income as part of the social welfare model in their countries. Finland, on a pilot basis, is planning to select two thousand unemployed persons who will receive certain basic monthly tax free income for next two years. A similar experiment of guaranteed unconditional basic income was done in Madhya Pradesh also in 2014.
The Logic behind it
Economists and policy makers advocate the provision of basic income due to following reasons:
- For the purpose of fighting inequality.
- To tackle slow wage growth and aid financial security.
- To tackle increasing fears of advancing automation due to globalisation and immigrants competing for jobs which are meant for the local population.
- To reduce the gap between haves and have nots.
Studies and surveys on the basis of trials and pilot studies have reported various benefits of providing basic income to people which are as follows:
- The nutrition intake of those suffering from poverty rose. Data provides that consumption of pulses, fresh vegetables and meat was up by huge number of 1,000%, 888% and 600% respectively.
- People were also able to spend more on healthcare and as a result, incidence of illness dropped.
- Among other social indicators education also witnessed progress in terms of enrolment and attendance, especially among female students.
- Basic income lived up to its rationale of reducing the gap between rich and poor and led to more equitable development.
- People living in villages worked harder than before and also took up multiple economic activities with the help of the basic income.
- With this confirmed source of income, indebtedness of people decreased and the capacity to save increased, hence placing them in a better financial position.
- Basic income acts as a kind of a social security for the weak, unwell or physically challenged.
- Also for people who are skilled and have employment but are not able to receive quality wages due to lack of opportunities or other reasons, basic minimum income acts as a supplement to the existing economic resources.
Along with the National Food Security Act, MGNREGA, a plan for provision of basic income can be a game changer for the country. The Government of India has also decided to dedicate a special chapter to basic income as a tool for poverty reduction in the upcoming Economic Survey.
However, the government needs to be cautious of its impact on the fiscal deficit.
A major reformation will have to be done to ensure smooth implementation of guarantee all three basic requirements for the poor i.e. food, basic income and wage jobs.
As a part of these reform measures, the government needs to work on the funding, implementation and mid-term review of MGNREGA.
To ensure the financial viability the government will have to replace existing subsidies and other such existing programmes. This will help in elimination of all over lapping policies and check the expenditure of the government as well.
The government can implement the basic income using the Socio-Economic Caste Census.