UBI: The idea is gaining ground

IN PERSPECTIVE

There has been a surge in interest among policymakers, economists and the media in the last few years on whether governments the world over should provide a basic income to all their citizens. Some of them call it ‘Universal Basic Income’ (UBI) while others call it a ‘Basic Income’, to be given not to all but to a target group fulfilling certain criteria.

In 2016, voters in Switzerland had overwhelmingly rejected a proposal for an unconditional basic income proposal, which would give Swiss Franc (CHF) 2,500 to all citizens regardless of their employment status or income level. Elsewhere, in Silicon Valley in the US, there has been a growing concern that artificial intelligence and automation will make millions of jobs redundant and a UBI will need to be provided to fulfill the basic needs of people. Andrew Yang, one of the early presidential nomination hopefuls for the 2020 presidential elections campaigned for a UBI plan called the ‘Freedom Dividend’, under which every American adult would get $1,000 every month. Yang’s campaign was in response to fears among citizens that increasing automation might snatch away as many as one-third of jobs in America in the next decade.

In India, the Economic Survey of 2017 highlighted the need for a UBI as a social security model, but one that would replace all existing subsidies. The very inclusion of the concept in the Economic Survey was an admission by the government of the failure of welfare schemes in helping the poor, and that it was willing to discuss, for the first time, the viability of the UBI concept with stakeholders.

Guy Standing, a British economist and professor at the University of London, has been a vocal advocate of unconditional basic income for many decades now. He says that it is a means of social justice and a mechanism for freedom from domination by public authorities using their power to decide arbitrarily on who should be included in welfare schemes. He states that contrary to welfare schemes like the public distribution system (PDS) in India, where all families below the poverty line get food items at subsidised rates, a basic income helps families choose the items they want to consume as money is transferred into their bank accounts directly.

Standing argues that because families have the freedom under the system, the UBI would have more emancipatory value than just money value. He further states that while basic income is not a panacea for all economic ills, it should be a part of the new distributive system that governments need to build in the 21st century.

Other proponents feel that governments can save time and money under this model as payments are automatic and direct. Successive governments, as well as the public, are aware of the shortcomings of the PDS -- the huge administrative and logistical costs that are incurred in procuring, storing and distributing food grains through the tens of thousands of fair price shops or “ration shops”, as they are called. Standing also points out that while the quality of food grains distributed through ration shops is inferior, womenfolk in most poor households waste a lot of time separating the grain from the chaff.

Though there has been consensus among economists on the role of governments in providing income to their citizens, the debate is over whether it should be income for all or income only to a target group fulfilling certain criteria. One group feels, why should income be distributed to all citizens? They point out that those who have the skills to earn in the economy do not need any support from the State.

Advocates of UBI, on the other hand, argue that just like any other fundamental right, UBI should be provided to all citizens. They assert that UBI can be a tool for individuals irrespective of gender, income status or age to face a crisis and can help them live life on their terms. Further, they say that UBI would empower people to take risks in life. They feel that citizens who do not want any support under UBI should be given the freedom to opt out of the system voluntarily, similar to the “opt out” option given to users under the LPG subsidy scheme.

Critics of basic income point out that men in the family getting basic income may spend money on alcohol, cigarettes, or drugs. The solution to this is to make the women in the family the beneficiaries, which would enhance women’s empowerment. Another concern expressed by the critics is that the UBI may make people reluctant to seek work by making them lazy and lethargic.

Whatever the merits and demerits of UBI, the debates and discussions on whether income should be given to all citizens or only to those passing “means tests” have given further impetus to a global movement that could become a reality soon.

(The writer is a chartered financial analyst and a former banker and currently teaches at Manipal Academy of Banking, Bengaluru)