Despite multiple concerns, the time for UBI is now. But, to prevent it from being just a paper tiger, much needs to be done for its effective implementation.
The idea of auniversal basic income (UBI) gaining traction in India is not novel. The notion gained currency in 16th century, when Thomas Moore advocated it in his novel
“Utopia.” Moore essentially applied the concept of basic income, for the sharing of wealth generated from the passing of public lands to private ownership. The concept of UBI thus,emerged from a philosophy of fostering social justice and equal opportunity. This found favour with both left-leaning thinkers such as John Kenneth Galbraith and those from the right such as Milton Friedman.
As with the conceptualisation of various political and economic notions, the basic approach behind UBI differs across developed and developing economies, like India. In the developed countries, UBI is seen as being complementary to the existing architecture of public services and social security nets. However, in India, the idea has been mooted as a substitute for the provision of an existing public service delivery.
While an overarching logic of instituting UBI in the west primarily stemmed from the aspect of being future-ready in a world swept by technological changes, including automation, the Indian case is strikingly different. Here, the essential argument in favour of an UBI is that it will help beneficiaries directly withoutthe occurrence of leakages, associated with subsidized schemes.
How doe UBI work?
To answer this adequately, the concept of UBI must be understood. UBI essentially relates to an idea that a regular periodic cash payment is to be delivered unconditionally to all citizens on an individual basis, extracted from the public funds, irrespective of the requirement of or willingness to work.
Typically, UBI would entail thatother subsidies and allowances are subsumed, in order to free up resources for the amount to be discharged to the citizens periodically. In this sense, the idea of UBI is essentially to move towards cash transfers in place of in-kind transfers.
The proponents of UBI have claimed its feasibility, especially during the Economic Survey of 2016-17, wherein it was asserted that UBI could work, if pegged at relatively low levels. Yet, a number that is too low will not hold the test of time, given factors like inflation etc.Thus, there exist multiple concerns related to the implementation of the income guarantee scheme.
One major argument cited by critics is the effectiveness of targeting. A glaring example includes the gross misallocation of resources under schemes like the PDS (Public Distribution System) and MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act). For instance, the Economic Survey points (2016-17) points out that an exclusion error from 2011-12 led to 40% of the population being excluded from the PDS, while the corresponding figure for the MGNREGA stood at 65%. Such exclusions are a product of inadequate capacity, bureaucratic efficiency and corruption, wherein the overall benefits of the developmental expenditure failed to reach the intended beneficiaries.
Another potent concern is the potential impact of UBI on the employment prospects of the citizens. To this end, the Finnish experiment producesan interesting insight. A UBI trial was introduced in 2017-18, with a random sample of 2000 participants who received an unemployment benefit. However, the benefits provided to the participants became a disincentive for the recipients, who would have otherwise been forced to go out and find gainful employment.
Action for India
Despite serious concerns, the idea of UBI should not be discarded straightaway. This is simply because UBI presents a social cushion to individuals to address obstacles like frequent income shocks, job losses and other periodic challenges that could overwhelm individuals, without a cover. Of course, certain measures need to be taken to ensure its effective implementation.
With any social welfare program, as observed earlier, a major concern lies with regards to the targeting mechanism – inclusion errors and exclusion errors. Inclusion errors result when undeserving people have access to the scheme owing to poor implementation and false data. Exclusion errors means the deserving are excluded from receiving benefits owing to systemic deficiencies.
While many economists have opined that UBI be provided to 20 % of the poor families (seen in the case with Nyay), a more plausible way is to rely on the methodology of the exclusion criteria. In other words, in a country like India where we are grappling with multiple poverty lines, where the causes of deprivation vary, the tool to target 20% of the poverty pyramid could fail. Instead, a simpler methodology for the scheme is simply to make it universal, like employing an automatic exclusion criterion (Socio-Economic Caste Census data), as has been done with the case of ensuring food security.
Further, critics have also suggested that merely providing an UBI could lead to labour market distortions, as reflected in the Finnish trial case. However, the Indian labour market depicts a different story. With a steady fall in employment generated in India’s organized sector and doubts looming over the overall aspect of job creation, the UBI could actually work like a magic bullet. In sense, the transfer of some sort of basic income could atleast ensure that citizens enjoy a basic standard of living.
To sum up, while a global consensus is yet to be out on UBI, there is a growing appetite for it in India, within political and economic circles. The political fervor around UBI given the election season notwithstanding, there is a long way to go before it can be implemented successfully through structural solutions and resource redistribution. Yet, invoking Victor Hugo’s words “no force on earth can stop an idea whose time has come” so perhaps, the time for UBI is now.
India Outbound
April 30, 2019
source https://indiaoutbound.org/universal-basic-income-for-india-renaissance-for-a-500-year-old-idea/
No comments:
Post a Comment