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27th October 2023 (9 Topics)

Can Universal Basic Income tackle India’s poverty?


Localised experiments with Universal basic income (UBI) have shown mostly positive outcomes across states, strengthening calls in favour of the social policy.

Understanding Universal Basic Income (UBI)

  • Principles of UBI Support: UBI involves unconditional, periodic cash transfers to individuals, letting them spend as per their needs.
  • Addressing Concerns about UBI: Critics fear market distortions and dependency, but UBI's efficacy in poverty alleviation is being evaluated.
  • The WorkFREE Pilot: Implemented in Hyderabad, it supports 1,250 residents in slums, empowering them economically and offering insights into UBI's impact.

UBI's Positive Impact on Beneficiaries

  • Diverse Use of UBI: Beneficiaries use cash support for food, fuel, education, and health expenses, demonstrating its versatility.
  • Enhancing Economic Activities: UBI aids in expanding businesses and investing in assets, contributing to economic growth in slum communities.
  • Breaking Generational Poverty Cycle: UBI is seen as a safety net, offering hope for families to escape entrenched poverty through education and economic opportunities.
  • The Universal Basic Income (UBI) is characterized by unconditional and periodic cash transfers and is being assessed for its impact on poverty eradication.

Impact on Society:

  • Reduction in Inequality: UBI can address income disparities, offering a safety net for vulnerable populations, fostering greater social equity.
  • Enhanced Social Security: UBI provides a universal safety net, reducing poverty and improving overall societal well-being and security.
  • Economic Empowerment: UBI can stimulate local economies, empowering individuals to invest in education, healthcare, and entrepreneurial ventures.
  • Freedom to Pursue Passions: UBI can offer individuals the freedom to pursue creative and innovative endeavors without financial constraints.

What are the challenges?

  • Market Distortion: UBI may discourage work, leading to labor market distortions and reduced productivity.
  • Dependency Concerns: UBI might create a culture of dependency on the state, potentially disincentivizing self-reliance and productivity.
  • Financial Feasibility: Doubts exist over the economic sustainability of implementing UBI on a large scale, straining government resources.
  • Debt and Mindless Spending: The reckless spending and accumulation of debt without oversight, potentially exacerbating financial instability due to UBI.

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