Definition
Universal basic income(UBI), basic income, basic income guarantee, basic living stipend is a new kind of social welfare program in which all citizens ( or permanent residents) of a country receive a regular, livable and unconditional sum of money from the government. There is no requirement for work or to look for work. There are no other requirements to receive the money. An unconditional income that is sufficient to meet a person’s basic needs (at or above the poverty line for the country) is called full basic income. A related system is negative income tax where the poor get the full amount from the government and the amount is less and less as the person income increases.
History
The idea of state-run basic income dates back to the late 18th century when English radical Thomas Spence and American revolutionary Thomas Paine both declared their support for a welfare system in which all citizens were guaranteed a certain income. The first social movement for basic income developed around 1920 in the United Kingdom. Its proponents included Bertrand Russell, Dennis Milner, and Clifford H. Douglas. In 1960s and 1970s the United States and Canada conducted several experiments with negative income tax.
Basic Income European Network, later on named Basic Income Earth Network (BIEN) was founded in 1986. It is a network of academics and activists who have been advocating the idea of basic income for all. Since 2005-2010 onwards, basic income again has become a hot topic in many countries. Few countries have implemented large-scale welfare system that are related to basic income, such as Bolsa Familia in Brazil, Basic income In Iran and Permanent Fund in Alaska, USA.
Advantages of Basic Income as a Social Welfare Program
1- Social Justice and Freedom
The main argument for universal basic income is social justice. A cash grant to all, no question asked, no strings attached, at the highest sustainable level, will advance social justice for all. Phillip Parijs has argued that basic income will lead to real freedom- personal, political and religious.
2-Poverty Reduction
Advocates of basic income argue that it has the potential to reduce or even eradicate poverty. Basic income pilot projects are being conducted in several countries around the world. Two basic income pilot projects have been underway in India since January 2011. According to the early study results (2015) villagers with the extra money, spent more on food and health care. In 68% of families children’s school performance improved, personal savings tripled and new business startups doubled.
3- Administrative Efficiency and Transparencies
Basic income is potentially a much simpler and more transparent welfare system than the existing welfare system in many countries. It will be even more effective in developing counties where there are multiple welfare schemes but the money is being siphoned off by the officials and many other middle men. Basic Income Earth Network claims that basic income costs less than current means -tested welfare benefits.
4- Gender Equality
Many prominent economists have argued that basic income (by providing direct income to women) will promote gender equality. If women have their own money they will have more say in the family as well as in the society.
5-Economic Growth
Some proponents have argued that basic income can increase economic growth because it would sustain people to invest in education and training which will lead to better job opportunities. An educated work force will lead to increase productivity and economic growth.
Some Objections to Basic Income
One of the most common objections to basic income is that it would cost too much. By simply multiplying poverty threshold for one-person household by the population of a country, one soon reaches a scary amount- often well in excess of the total government expenditure of a country. But these calculations are misleading. A wide range of poverty eradication schemes can be abolished once a universal basic income is in place. But for most people of working age, the basic income and the increased taxes (higher rates for the higher income and lower rate for the lower income group) required to pay for it will largely offset each other.
The second objection is moral rather than simply pragmatic. A basic income, it is often said, gives the underserving poor something for nothing. They will spend it on alcohol, drug or on gambling. But it is a false assumption. Most people want to work and not sit idle if given an opportunity. They want to contribute to their own, and their family’s welfare. Multiple pilot studies have shown that families spend the extra money on food, children’s education and healthcare and not on alcohol.
International Projects
Many countries around the world are experimenting on basic income. Brazil’s Bolsa Familia program has been credited with reducing absolute poverty and inequality in Brazil. Started in 2003, it now facilitates small cash transfer to 46 million Brazilian whose current income places them below the poverty line. It costs the government 0.5% of Gross National Product. Iran was the first country to introduce a national basic income in 2010. Finland also has a basic income schemes for its citizens.
US-based charity Give Directly, is giving $22.50(about 1500 rupees) every month to 21,000 poor adults (via mobile phone) in Kenya, with no strings attached. Presently itis, one of the largest trials in the world. The trial is going to last for 12 years. The preliminary results have been very encouraging.
Indian Context
On January 31, 2017, the Economic Survey of India, Ministry of Finance included a 40 page chapter on basic income. It outlined the 3 components of the proposed program: 1- Universality, 2-Unconditionality, and 3-Agency. The UBI proposal of the Finance Ministry, intends to provide a basic income to all without any means test. It wants to treat the poor as agents rather than subjects, liberating them from the paternalistic relationship with the state.
According to the headline estimate, (The times of India) an annual transfer of Rupees 7,620 to their Adhaar linked bank accounts distributed to 75% of the population would push down Indian poverty rate (based on 2011-12 Tendulkar poverty line) down to 0.5%.
Many experts in India have criticized the amount to be too low. They feel that the sum of 7000 rupees a year seems hardly a basic income. It will not purchase much.
Arvind Subramanian, Chief Economy adviser to the Government of India, has issued a prediction that at least one or two states in India will implement universal basic income by 2020. I am hoping state of Odisha would be one of those states.
Conclusion
Seventy years after independence, India’s poverty rate is unacceptably high (around 22%) especially in Odisha, Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Rajasthan and Uttar Pradesh. Poverty has various manifestations: hunger and malnutrition, ill health, increased death rate, limited or no access to education, homelessness and unsafe living conditions, lack of freedom, political, social and cultural discrimination and exclusion.
“I shall work for an India in which the poorest shall feel that it is their country, in whose making they have an effective voice, an India in which all communities shall live in perfect harmony…. There can be no room in such an India for the curse of untouchability or the curse of intoxicating drinks and drugs… Women will enjoy the same rights as men. … This is the India of my dream”. Mahatma Gandhi
It is time India fulfills Gandhi’s dream. It can do so by implementing universal basic income for all, especially for the poor as soon as possible. It will be the quickest way to reduce and even eradicate poverty in India. It is not a question of money. It is question of will.
Sources
1- Phillip Van Parijs and Yannick Vanderbergh, Basic income: A Radical Proposal for Free Society and a Sane Economy, Harvard University Press, Boston, 2017
