Universal Basic Income in India: Analysis

Recently, in Switzerland, the Swiss required the government to take steps towards implementing a universal basic income. It would be an unconditional cash payment given to all citizens. The idea is several years old and currently, Switzerland and Finland are experimenting with the same. Key proponents of this idea are as follows:

  • Spanish philosopher Johannes Ludovicus Vives had proposed that the government should ensure the minimum level of subsistence for all, but only to those who showed willingness to work.
  • Thomas Paine, one of the US’s founding fathers, had argued that every person must be entitled to an equal basic endowment because “the earth, in its natural, uncultivated state was the common property of the human race”.
  • Bertrand Russell, a British had argued that there should be a certain small income which is sufficient for necessaries must be unconditionally provided to all.

The highly discussed concept of universal basic income has three significant characteristics. Firstly, it is universal and not targeted; secondly, it calls for cash transfer in lieu of in-kind transfer; and thirdly, it is unconditional.

UPSC may put this concept to ask you, if something like Universal Basic Income may be suitable for India.

There are numerous projected benefits projected due to the underlying characteristics viz. universality, cash transfer and unconditional. When you launch a universal programme, you actually don’t need to care about problem of exclusion. A uniform programme will reduce burden of bureaucracy to identify the deserving beneficiaries of any targeted programme. Secondly, it is generally argued that Cash transfers are less market distorting then in-kind transfers. When the cash is transferred, people are free to spend the cash as they want. An example of conditional in-kind transfer in India could be cited of mid-day meal scheme, where the meal (an in-kind transfer) is conditional upon attending school.

Now let’s be little pragmatic. The concept is based upon the assumption that this income should be for those who are “willing to work”. How to identify who is willing to work? Secondly, if I get some income from the government for subsistence without work, I will end up losing motivation for work because I am assured that I would be receiving unconditional cash transfers. Lastly, it’s an expensive idea simply unaffordable by coffers of governments in the country.