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Day 42 – Q 1. World over, the idea of providing basic minimum income has gained traction after COVID-19 took away jobs and exposed the deep rooted vulnerabilities of the poor populations. What are your views on this idea? Should India implement a universal basic income scheme? Substantiate your views. 

  • IASbaba
  • July 28, 2020
  • 0
GS 2, Social Sector & Development, TLP-UPSC Mains Answer Writing
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1. World over, the idea of providing basic minimum income has gained traction after COVID-19 took away jobs and exposed the deep rooted vulnerabilities of the poor populations. What are your views on this idea? Should India implement a universal basic income scheme? Substantiate your views. 

जब से COVID-19 ने लोगों के रोजगार छीन लिया और गरीब आबादी की गहरी कमजोरियों को उजागर किया है, तब से दुनिया भर में मूल न्यूनतम आय प्रदान करने के विचार ने काफी सहमति पायी है। इस पर आपके क्या विचार हैं? क्या भारत को एक सार्वभौमिक बुनियादी आय योजना लागू करनी चाहिए? अपने विचारों की पुष्टि करें।

Demand of the question:

It expects students to express their views on the idea of providing basic minimum income. It also expects students  to express their views with relative examples  whether India should implement universal basic income scheme or not.

Introduction:

Basic minimum income is a theoretical governmental public program for a periodic payment delivered to all citizens of a given population without a means test or work requirement.

Body:

The Covid-19 crisis has come unannounced and disrupted the daily lives of people.   Economies every sector is impacted by the COVID-19 crisis, giving rise to possibility of new global recession in upcoming period.  

  • The economic fallout of the pandemic has led to widespread job losses and pay cuts, and countless might be finding it challenging to get a new job with better or even similar perks during this lockdown.
  • The world lost nearly 400 million full-time jobs in the year’s second quarter (April-June 2020) due to the novel corona virus disease (COVID-19) pandemic, said the International Labour Organization (ILO).
  • With respect to Indian economy, It lost 124 million jobs in March and April, primarily in the informal sectors comprising small traders and wage labourers; employment was also lower in self-owned businesses and salaried employees, too, lost jobs.
  • Hence, in the time of COVID-19 pandemic where almost all economic activities were shut and people left with no source of income in hand, there arouse the call for Basic minimum income for all because of its following benefits.

Benefits of providing Basic minimum income:

  • Administrative Efficiency: In place of plethora of separate Government schemes, Basic minimum income will reduce the administrative burden on the state.
  • Psychological Benefits: Guaranteed income reduces pressure of finding a basic living on a daily basis.
  • Better Targeting of Poor: As all individual are targeted under Basic minimum income, Exclusion error i.e. poor being left out is Zero though Inclusion error i.e. rich gaining the access is 60%. e.g. India’s Aadhar coverage stands at 99% i.e. nearly 111 crore people, so combining this with JAM trinity scheme will reap immense benefits.
  • Improvement in financial inclusion: Payment transfer encourages usage of bank account leading to higher profits for banking correspondents.
  • Credit & Insurance: Increase in income will release the constraints on access to credit for those with low income. Guaranteed income will provide Safety net against health income and other shocks.

However, the idea of basic minimum income is not hole proof due to following reasons:

  • Some worry that the free cash would encourage poor people to increase their spending on ‘sin’ goods like alcohol and tobacco. 
  • Money for nothing: The concern about a citizens income is that people will get money without doing anything. It may encourage people to be lazy and live off benefits.
  • Disincentive to work: Some fear that if universal income is given, some will work less. Studies are mixed, but one study from Canada found that as universal credit is relatively low, the main groups who worked less were young mothers and teenagers in education.
  • Less flexible labour markets: The basic minimum may mean part-time workers, such as working mothers and students don’t need to supplement income by working part-time, reducing the flow of temporary part-time workers. Others argue this is not a problem as we should try to avoid a part-time, zero-hour contract labour market.

In 2016, the idea of a Universal Basic Income (UBI) in India was discussed in  Economic Survey 2016-2017, as a serious and feasible solution to India’s poverty and a hope for the economy as a whole. 

  • Supporters believe this large-scale welfare program could be revolutionary and could provide a poverty alleviation blueprint for other developing countries.
  • Recently a limited version of the UBI in the form of the Pradhanmantri Kisan Samman Nidhi Yojana (PM-KISAN) which promises ₹6,000 per annum to farmers who own less than 2 hectares of land is successfully implemented in India.
  • Similarly, The Rythu Bandhu scheme is a welfare scheme started in the state of Telangana in May 2018, aimed at helping farmers. Each farm owner receives 4,000 INR per acre twice a year for rabi and kharif harvests.
  • Internationally, Finland’s government is planning to give every one of its citizens a basic income of 800 Euros (£576) tax free and abolish benefits altogether.
  • However, critics are wary of establishing such a wide-scale program because it might undermine the fragile social security architecture, cause already employed workers to drop out of labour force and encourage idleness, and also encourage wasteful spending.

Conclusion:

The interesting thing about a Universal basic income is that it gains support from almost every strata of the society except few. UBI can help to end poverty, discourages low wages, in short UBI has the potential to reduce inequality and revolutionize our lives. Hence, if implemented with caution it will help the marginalised sections of society to develop themselves. 

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