A modified UBI policy may be more feasible

The idea of Universal Basic Income (UBI) has gained renewed attention due to a report from the International Labour Organization highlighting job growth stagnation globally, exacerbated by automation and AI. In India, this is particularly pertinent as youth unemployment remains a pressing issue. The concept has resurfaced amid discussions on replacing inefficient welfare schemes with direct income transfers.

Overview of UBI and Its Challenges

• Defining UBI: Universal Basic Income is a model of social security where all citizens receive a regular, unconditional sum of money, regardless of other income. This differs from existing cash transfer schemes that target specific demographics. The goal of UBI is to provide a safety net amidst rising unemployment and jobless growth.
• Feasibility vs. Desirability: While UBI could address poverty and unemployment, debates revolve around its feasibility within budgetary constraints. Policymakers need to weigh the potential benefits of a UBI against other policy priorities, such as stimulating job growth and providing universal basic services.
• Existing Cash Transfer Schemes: India has implemented various income transfer schemes, such as PM-KISAN, which provides Rs 6,000 annually to farmers. However, issues like inclusion errors highlight the inefficiencies of targeted schemes, prompting discussions on the merits of a universal approach to income transfers.

Proposed Modified UBI

• Feasible Implementation: A more practical approach to UBI would involve limited transfers pegged at 1% of GDP per capita, providing approximately Rs 144 monthly to every citizen. This amount could be implemented by expanding existing schemes like PM-KISAN to include all citizens, thus simplifying administrative processes.
• Logistical Considerations: Implementing a modified UBI would require addressing challenges like ensuring access to cash-out points and minimizing technology failures during distribution. Successful execution would depend on overcoming these last-mile delivery issues to reach the intended beneficiaries.
• Complementary Policy Integration: Combining UBI with existing schemes such as MGNREGS could enhance coverage for vulnerable groups, including the elderly and disabled. Such integration underscores the importance of both income and in-kind transfers, especially highlighted during crises like the COVID-19 pandemic.

Practice Question

Q. Discuss the potential advantages and challenges of implementing a Universal Basic Income in India, considering existing welfare schemes and fiscal constraints.