IS INDIA READY FOR A UNIVERSAL BASIC INCOME?

This blog is authored by Nargees Basheer, a fourth-year law student pursuing BA.LLB (Hons.) from The National University of Advanced Legal Studies (NUALS), Kochi.

Introduction

The discussion surrounding Universal Basic Income (UBI) has gained traction in recent times amidst the greatest crisis humankind has faced since the Second World War. The novel Coronavirus has exposed the inadequacies in the existing targeted welfare mechanisms and put forth the need for reforms. In India, government after government has brought a number of poverty alleviation and social welfare programs which, on the face of it, signify a socially secure population. However, millions of people in India still struggle to secure basic needs. An overview of the economic measures resorted to shed light on its numerous shortcomings, one of which is that most of the schemes or programmes are beneficial only to specific groups of people.

Analysis of the issue

Many a time, the means-tested or earned benefits bases are relied upon to assess whether persons are eligible to be beneficiaries of the schemes or programmes. The problem with a targeted approach for welfare delivery is that it often excludes persons who are ideally supposed to be included but for want of meeting certain conditions. For instance, a person who wishes to avail benefits under the Indira Gandhi National Disability Pension Scheme (IGNDPS) must have a minimum of 80% disability and should be living below the poverty line. The Public Distribution System (PDS) is yet another programme that faces the problems of exclusion and leakages that comes with targeted welfare programmes. The necessity of having to comply with conditions significantly affects the number of beneficiaries.

Further, schemes and programmes such as these tend to leave people in a welfare trap because of the ceiling of eligibility that has been imposed in almost every welfare scheme of the government. This leaves them in fear of climbing above the ceiling as they will not be able to avail the benefits anymore. Here lies one of the best arguments for universalisation of benefits; in that, they will no longer be forced to settle for a lesser standard of life merely to remain eligible for government benefits as these will follow regardless of parameters.

An alternative

UBI has been argued by some to be a legal right as opposed to a mere policy. In this context, it is viewed as a right that every person is entitled to, independent of other sources of income, employment or willingness to work, or living situation. Different proponents justify this notion in different ways; while some resort to the natural law school of thought, some find reason in the democratic idea of the freedom to not work. A major implication of treating UBI as a legal right is that it would be prioritized over social policies, although it would not be as absolute as a constitutional right. Other implications include that UBI would be justiciable, like any other legal right, and it would be universal by nature. The status of a legal right will also entail better enforcement on the part of the State. Furthermore, it would be on the State to ensure that legislations are enacted towards securing a UBI for its citizens. An interesting feature of this legal right is that it would be positive in nature as opposed to most legal rights and in particular, fundamental rights.

Scholars argue that the Universal Basic Income is the best available alternative to the existing mechanism. With a basic income, people could return to school, invest in activities they are passionate about although they may not yield much income, remedy the issue of the ‘welfare trap’ and improve upon their general mental health. The criticism that employers will offer lesser pay if there is a basic income scheme in place could be actively countered by the argument that such a scheme would equip people with a bargaining power because they will have something to fall back upon if faced with unemployment.

The Implications of UBI in India

However, the Indian waters have to be tested to know the extent to which any or all of these benefits of UBI may be reaped. An examination of the Indian scenario is also necessary to identify whether UBI as a legal right will be successful. The Economic Survey of 2016–17 provides the most exhaustive treatment thus far from implementing an Indian UBI. An ironic feature of the Survey is that it seeks to implement a UBI for 75% of the population leaving out the wealthiest 25%. It claims that a UBI would help do away with the leakages, corruption and exclusion of the poor in the existing mechanism. There are numerous drawbacks to the proposal by the Economic Survey. Despite the defects in the existing system, the transmission from existing schemes, mainly the PDS and MNREGA, will not be effortless as a large population still depend on these. Huge costs will be incurred and the efficiency will have to be top-notch, in the absence of which, negative results as were in the case of the Pondicherry pilot for the Direct Bank Transfer (DBT) scheme could be repeated. Further, studies have shown that people prefer PDS over cash transfer if the former were to function efficiently. This brings to light that substituting the PDS with a UBI might not only be a costly affair but one that will take a lot of time and effort adjusting to given that this also calls for a shift to familiarizing the population with technology and banking services. Pilot studies in India have indeed shown that a UBI will not lead to alcoholism or unproductivity of the population as had been speculated. The dilemma, however, is not about the benefits of UBI but about whether India is ready for it presently and if so, whether complete substitution of existing schemes would bring the economy down. With respect to targeting 75% of the population, it seems that the problems associated with targeting, in the existing schemes such as leakages and exclusion would continue to exist and will inevitably lead to vote bank politics. Scholars who have advocated for UBI have considered it to be a basic right of citizens and universality is one of the most important pillars of the theory.

Conclusion

UBI is a welfare statesman’s ultimate dream for his State. The Survey has rightfully set the tone for the discussion and its observation that the shift to a UBI should be a gradual one is proper. However, there are numerous problems that India is faced with, which makes it difficult to implement what may seem right on paper. The drawbacks of the existing schemes and the negative results from the pilots of DBT can be summarily accorded to the problems in the system, which need to be remedied before the discussion on UBI may be taken further. Data from the pilots conducted in India can only be considered to have been derived from a safe-space simulation. To reach a better understanding, UBI pilots need to be conducted on large scale for longer periods. As to whether India is ready to accept the idea of UBI as a legal right, it is contingent on proof that such a right will outperform the social welfare policies in place. It is ideal that India adopts economic measures and reforms that lead to achieving the larger goal of implementing a UBI that is universal and unconditional in every sense. The criticism that implementation of UBI carries with it huge costs is not an overstatement. Nevertheless, it may be recalled that “eradicating poverty is an investment”.