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ubi, Universal Basic Income Scheme

UBI | Universal Basic Income Scheme

Universal Basic Income Scheme

The economic survey 2016-17 nominated in parliament today by the Union Finance minister Shri Arun Jaitley has promoted the concept of UBI (Universal Basic Income) scheme as the alternative to numerous social welfare schemes with an effort to decrease poverty. The survey says that UBI will poverty to 0.5% would cost between 4 to 5 percent of GDP, assuming that those in the top 25% income bracket will not take part. Alternatively, the existing middle-class subsides & food, fertilizer, and petroleum subside cost about 3% of GDP.

What Is Universal Basic Income Scheme?

In simple words, Universal Basic income indicates to an unreserved minimal income paid by the government of all its citizens. This main aim of this scheme is to hand out money for free to benefit 2000 jobless people. This will be performed over the 2-year trial period, and the willingness of this blue and white collar unemployed to take part in the labor market will be calculated. If it works then this scheme will be continued.

The same policy to hand-out 2500 & 625 Swiss Francs to each child and adult, regardless of their employment status, was determined by Switzerland but it was completely rejected by citizens.

Why Is Universal Basic Income Scheme Important?

In India, ill-targeted subsidies on agriculture, gasoline, and food have led to corruption and leakages. Despite about 4% of GDP is spending every year on it, the fact is that these subsidies seldom reach the citizen at bottom of pyramid is well-documented. The MNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme) operates on same lines as UBI. It ensures a minimum of 100 days employment every year, for about one person from the rural household.

However, the performance of MNREGS reported through different analyses and audits seems to be discouraging. As per the report, the total number of households which can actually manage to fulfill the guaranteed 100 days of employment was just 10% in 2013-14. This scheme was reduced to 3% in 2014-15. Moreover, the average working days of the person per household dropped to 46 days in 2013-14 and 35 in 2014-15.

However, the performance of MNREGS reported through different analyses and audits seems to be discouraging. As per the report, the total number of households which can actually manage to fulfill the guaranteed 100 days of employment was just 10% in 2013-14. This scheme was reduced to 3% in 2014-15. Moreover, the average working days of the person per household dropped to 46 days in 2013-14 and 35 in 2014-15.

Universal Basic income scheme at least take care of individual's food & shelter and it is expected to alleviate the social and economic uncertainty to some degree.

Some important points about UBI


ubi, Universal Basic Income Scheme
  • The concept of UBI has got a lot of boosts while the government of Finland declared the introduction of trial involving 2000 unemployed people previous year
  • The UBI amount will be greater than all the present welfare programs of government including the Pradhan Mantri Awas Yojana, the Mid Day Meal scheme, the Sarva Shiksha Abhiyaan, the Sarva Shiksha Abhiyaan, the Swachh Bharat Mission and the Pradhan Mantri Gram Sadak Yojana as per the 2016-17 economic survey.
  • The Universal Basic Income encourages liberty because it is anti-paternalistic and it opens up the possibility of flexibility in labor markets, motivates equality to decrease poverty, efficiency by decreasing waste in government transfers and also promotes greater productivity.
  • A UBI scheme for whole BPL population would make the government cost about Rs. 3.24 lakh crore annually, evaluating a Rs. 1000 monthly income being provided to every poor person. The government would provide a cost-benefit analysis on different subsidies being provided to the poor, vis-à-vis giving them straight cash transfer in the form of UBI.
  • During 2016-17, the center has evaluated its expenditure on subsidies at Rs. 2.5 lakh crore. The massive chunk of Rs. 1.34 lakh crore has been evaluated as food subsidy for the whole year, whilst Rs. 70, 000 crore in the estimated subsidy for fertilizers.
  • This main aim of this scheme is to boost the income of beneficiary households to that they can meet their requirements, replacing them with UBI will also mean losing some of the vital benefits of these schemes.

Benefits Of UBI

  • Vulnerability and poverty reduction
  • Improvement in financial inclusion
  • Better targeting the poor – As all individuals are targeted, exclusion error is zero through inclusion error is about 60% in India.
  • The income floor will offer a safety net against income, health and other shocks
  • Administrative efficiency- A UBI in place of plenty of separate government scheme will decrease the administrative burden of the state
  • Psychological Benefits – An assured income will decrease the pressures of acquiring a basic living on a usual basis.

Thus, Universal Basic Income Scheme – Veecharadhin is to benefit the people below the poverty and unemployed to meet their daily expenses. The UBI scheme has been proposed as the good alternative to existing subsidy schemes.

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