Social Justice: Universal Basic Income
GS Paper 2: Welfare schemes for vulnerable sections of the population by the
centre and states and the performance of these schemes.
Universal Basic Income is a radical and compelling paradigm shift in thinking about both
social justice and a productive economy. It is premised on the idea that a just society needs
to guarantee to each individual a minimum income which they can count on, and which
provides the necessary material foundation for a life with access to basic goods and a life of
dignity. A universal basic income is, like many rights, unconditional and universal: it requires
that every person should have a right to a basic income to cover their needs, just by virtue
of being citizens.
The need for UBI
UBI is, first and foremost, a test of a just and non-exploitative society. It promotes
equality by reducing poverty. It promotes efficiency by reducing waste in
government transfers. And it could, under some circumstances, even promote
Conditional on the presence of a well-functioning financial system, a Universal Basic
Income may simply be the fastest way of reducing poverty. UBI is also, paradoxically,
more feasible in a country like India, where it can be pegged at relatively low levels
of income but still yield immense welfare gains.
Our current welfare system, even when well intentioned, inflicts an indignity upon
the poor by assuming that they cannot take economic decisions relevant to their
lives. A UBI is also practically useful. The circumstances that keep individuals trapped
in poverty are varied; the risks they face and the shocks they face also vary. The state
is not in the best position to determine which risks should be mitigated and how
priorities are to be set.
UBI is an acknowledgement that society’s obligation to guarantee a minimum living
standard is even more urgent in an era of uncertain employment generation.
In India in particular, the case for UBI has been enhanced because of the weakness
of existing welfare schemes which are riddled with misallocation, leakages and
exclusion of the poor.
Advantages of UBI
*Poverty and vulnerability will be reduced in one fell swoop.
*As all individuals are targeted, exclusion error (poor being left out) is zero
*A safety net against health, income and other shocks.
*Will reduce the pressures of finding a basic living on a daily basis.
*Transfers will encourage greater usage of bank accounts.
Disadvantages of UBI
*May spend this additional income on wasteful activities.
*Might make people lazy and opt out of the labour market.
*Men are likely to exercise control over spending of the UBI.
*Purchasing power may severely be curtailed by market fluctuations.
*May be difficult for the government to wind up a UBI in case of failure.
Overcoming the challenges of UBI
The UBI, by design, should effectively tackle issues related to misallocation. In
addition, by focusing on universality, UBI reduces the burden on the administration
further by doing away with the tedious task of separating the poor from the nonpoor.
Conceptually, a UBI reduces out of system leakage because transfers are directed
straight to the beneficiaries’ bank accounts. UBI’s expanded coverage will likely
impact out of system leakage since the state is answerable to a larger section of its
citizens. Finally, given the fewer avenues for leakages, monitoring a UBI would be
easier than many other schemes.
On the payments side, improving financial inclusion is both a demand and supply
side challenge. While on the demand side, there is a need for behavioural change on
the part of account holders so that they use their accounts more often, on the supply
side, banks need to find it profitable to provide access to banking services.
As a form of social security UBI will help in reducing inequality and eliminating poverty. Thus
it ensures security and dignity for all individuals. As human labour is being substituted by
technology, there will be reduced wage income and reduced purchasing power. UBI will
compensate for reduced purchasing power. There would be drastic changes in the way
government spends its revenue generated from taxation and other sources. Currently,
Government spends its revenue on various services as well as on subsidies. UBI would mean
that government may move away from service delivery and empower its citizens to access
services through cash transfer.
Previous Year Questions
- Despite Consistent experience of high growth, India still goes with the lowest indicators of human development. Examine the issues that make balanced and inclusive development elusive. (2019)
- There is a growing divergence in the relationship between poverty and hunger in India. The shrinking of social expenditure by the government is forcing the poor to spend more on non-food essential items squeezing their food-budget – Elucidate. (2019)
- Multiplicity of various commissions for the vulnerable sections of the society leads to problems of overlapping jurisdiction and duplication of functions. Is it better to merge all commissions into an umbrella Human Rights Commission? Argue your case. (2018)
- ‘The emergence of Self Help Groups(SHGs) in contemporary times points to the slow but steady withdrawal of the state from developmental activities’. Examine the role of the SHGs in developmental activities and the measures taken by the Government of India to promote the SHGs. (250 words) (2017)