Universal Basic Income(UBI)

Universal Basic income(UBI), also called citizen’s income, citizen’s basic income, basic income guarantee, basic living stipend, guaranteed annual income, or universal demo grant, 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. It’s main purpose is to reduce inequality and eliminate poverty.

Features of UBI:

1. Universal Scheme: UBI is a universal scheme in nature. It means UBI is not targeted so all citizens of the country will receive the payment of cash without any discrimination.

2. Periodic: Money will be distributed to the beneficiaries at a fixed interval i.e. monthly/yearly.

3. Cash Payment: The beneficiaries will get the cash directly into their account. So they won’t get anything in kind of cash i.e. vouchers for goods or services.

4. Unconditional Scheme: It means one need not prove his or her unemployment status or socio-economic identity to be eligible for UBI. So social or economic positions of the Beneficairy/individual are not taken into consideration.

5. Individual Beneficiary: In this scheme each citizen (or adult citizen) is considered as the beneficiary rather than each household.

An unconditional income that is sufficient to meet a person’s basic needs (i.e., at or above the poverty line) is sometimes called a full basic income; if it is less than that amount, it may be called a partial basic income.
One central motive for basic income is the belief that automation and robotization is paving the way for a world with fewer paid jobs.

Today, disruptive technologies like artificial intelligence are ushering in productivity gains that we have never seen before. They are also steadily reducing human capital requirements, making jobs a premium. The gap between the rich and everyone else has expanded significantly in recent years, and many fear that automation and globalization will widen it further.

Good Idea Why?

1. Currently, the government provides services through various social welfare schemes but now the government wants to change this trend by giving them cash so that peoples can buy services/goods of their choice.

2. UBI will provide secured income to individuals.

3. The scheme will reduce poverty and income inequality in society.

4. It will increase the purchasing power of the poor, so aggregate demand in the economy will get a boost.

5. It is easy to implement because the government needs not to identify the beneficiaries which is very tough task for State and Central Government.

6. This scheme will reduce the wastage of government money because its implementation is very simple.

If the only choice were between mass impoverishment and a UBI, a UBI would be preferable.

UBI is a project for reforming capitalism into an economic system by empowering labor in relation to capital, granting workers greater bargaining power with employers in labor markets, which can gradually de-commodify labor by separating work from income. This would allow for an expansion in the scope of the social economy by granting citizens greater means to pursue non-work activities (such as art or other hobbies) that do not yield strong financial returns.

Such a program would allow people to spend their money on whatever they value most. It would create a broad sense of ownership and a new constituency to shake up the system of big-money politics. Studies of conditional cash-transfer programs in developing economies have found that such policies can empower women and other marginalized groups.

Bad Idea Why?

1. There is a strong possibility that free cash to the poor can make them lazy or it may reduce the incentive for work, increasing the rate of inflation in the economy.

2. There is no guarantee that the given cash will be spent on productive activities, health & education, etc. It may be spent on tobacco, alcohol, drugs, and other luxury goods etc.

3. It may be that workers can refuse to work (as it had been observed in the case of MGNREGA) as a laborer or demand higher wages which can increase the cost of production of agricultural goods.

4. UBI is a flawed idea, not least because it would be prohibitively expensive unless accompanied by deep cuts to the rest of the safety net.

5. Without major cost savings, federal tax revenue would have to be doubled, which would impose massive distortionary costs on the economy.

And, no, a permanent UBI could not be financed with government debt or newly printed currency. Sacrificing all other social programs for the sake of a UBI is a terrible idea. Such programs exist to address specific problems, such as the vulnerability of the elderly, children, and disabled people.

Imagine living in a society where children still go hungry, and where those with severe health conditions are deprived of adequate care, because all the tax revenue has gone to sending monthly checks to every citizen, millionaires and billionaires included.
Basic economic theory implies that taxes on income are distortionary in as much as they discourage work and investment. Moreover, governments should avoid transfers to the same people from whom they collect revenue, but that is precisely what a UBI would do.

Besides, a more sensible policy is already on offer: a negative income tax, or what is sometimes called “guaranteed basic income.”
Rather than giving everyone $1,000 per month, a guaranteed-income program would offer transfers only to individuals whose monthly income is below $1,000, thereby coming in at a mere fraction of a UBI’s cost.

In conclusion it can be said that history has proven that freebies never changed the economic conditions of the people. So giving a sum of Rs.7,620 per person/year will not change much as we have seen this in the MGNREGA schemes which gives Rs.10,000 per year to the people.

So the government should focus to increase the skill of the people at free cost rather than free cash.

Categories: Economy

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