It is said that no
power can stop an idea whose time has come. The idea that is exciting
economists globally these days is Universal Basic Income ( UBI): there was even
a whole session devoted to it at Davos . The concept of UBI is simple: a
regular, periodic payment to ALL citizens by the government, without any
conditions or stipulations of income or employment. Its beauty is its
simplicity ( or universality) requiring no complex bureaucratic underpinning
for its implementation.
The idea is neither
new nor novel. It was first mooted by Thomas More in his 1516 book Utopia and
since then it has found favour with the likes of Bertrand Russell, Thomas Paine
, John Stuart Mill, Martin Luther King Jr. and Milton Friedman. The beauty of
the concept is that it is politically neutral: it appeals both to the right and
the left. The latter considers it as a tool of social justice postulated on the
belief that public wealth is created by all peoples over generations, not only
by the rich, and so should be distributed equitably; it is also a means to
tackle poverty and unemployment. The right sees it a more efficient way to
utilise funds for welfare, compared to the current regime of huge , untargeted
and leaking subsidies.
By no means is there unanimity, however: both
sides of the political divide have their criticisms too. Some on the left feel
that UBI is an excuse for the govt. to opt out of its responsibility for social
intervention in key sectors such as health and education, by simply handing out
a monthly dole. Conservatives on the
right oppose it on the ground that it will promote indolence and provide
a disincentive for seeking employment. Whatever be the merits, however, the
fact is that governments are willing to give it a try, even though the Swiss
rejected it in a referendum last year. Pilot programmes have been introduced in
Finland, Canada, the Netherlands, the USA and Italy. In India too it has entered
public discourse via the views of the Chief Economic Advisor, Arvind
Subramaniam, contained in the Economic Survey of this year: he appears to
support it, though not immediately, perhaps.
What is driving this
resurrected interest in this 500 year old idea is undoubtedly the widening
income/ wealth disparities post globalisation and the looming spectre of
technology driven unemployment. The west has already started shedding millions
of jobs because of automation, robotics and artificial intelligence, and even
technology’s pioneers like Bill Gates and Elon Musk have warned that things are
going to get worse. India’s position is even more critical, given our
historical levels of poverty, mind boggling inequity and already existing
massive unemployment. The country is simply not able to create the minimum ten
million new jobs needed every year.
The unemployment rate in 2016 was 7.97%, which
is a hopeless underestimation since it assumes that 50% of the population is
engaged in agriculture: in actual fact at least 75% of these agriculturists are
significantly underemployed but remain in agriculture because of lack of
options. The even more worrying thing is that the rate of job creation over the
last three years has been falling: from 4.97 lakh jobs created in 2014 it has
dwindled to 1.35 lakhs in 2015-16. It would be worse now, post demonetisation,
the beef ban, the liquor-on-highways ban and GST. Technology too is beginning
to bite: IT sector alone is expected to shed 600,000 jobs in the next three years.
PRAHAR, a non-profit, has predicted that we are likely to lose seven million
jobs by 2050 whereas the population by then would have grown by 600 million.The
social effects of such large scale unemployment and its fall-out on poverty
ratios and the country’s stability is the biggest argument for introducing UBI
and validating the views of Gates and Musk.
The primary argument
trotted out against UBI is: can we afford it? Vijay Joshi, an internationally
renowned economist at Oxford has calculated that if a UBI payment of Rs.
17500.00 were to be paid to each household annually it would cost 3.5 % of the
country’s GDP. As against this just the non-merit subsidies amount to 7.7% of
GDP. On paper, therefore, it is affordable and it still leaves the merit subsidies
on vital areas such as education, health, PDS and nutrition untouched. But
perhaps a case can be made out to subsume PDS in UBI also as it is perhaps the
most wasteful and inefficient of subsidies and also involves huge costs in
procurement, storage and distribution. But mathematics apart, there are other
concerns that militate against UBI: should the state withdraw so completely and
leave the poor to market forces ? What about the accountability of the state ?
Will this not lead to the ultimate withering away of the welfare state ? Is the
country logistically prepared for such a huge exercise to ensure there is no
repeat of the demonetisation travails ?
That last question at
least can be answered somewhat confidently. There are now about 350 million Jan
Dhan accounts and the Aadhar penetration has reached 1200 million individuals.
Linking of bank accounts and Aadhar has now been made compulsory by 31.12.2017,
therefore the basic system for remitting UBI payments directly to beneficiary
accounts is more or less available, theoretically. In actual practice, however,
there may be grey areas that can cause untold misery and chaos, especially in
rural areas and to the most marginalised ( who, by definition, need UBI the
most): lack of bank branches in villages, poor internet connectivity,
inoperative Jan Dhan accounts, lack of awareness of the banking process, a huge
migratory population. Furthermore, as Joshi has pointed out, the removal of
subsidies itself is a tricky exercise; without proper sequencing it can cause
havoc and destitution. The country cannot afford to go through the disorganised
and unplanned trauma of demonetisation again.
The ideal, and
sensible, way to go about it is to launch a few pilot projects in carefully
selected areas ( blocks rather than districts) that represent the different
profiles- social, economic, demographic, infrastructural- that constitute the
smorgasbord identity of our country, and then analyse how well the programme caters
to each. The government should give up its distrust of NGOs and learn from
their experience too. SEWA Bharat, an NGO, has in fact been implementing two
UBI schemes in Madhya Pradesh, with assistance from UNICEF, for some years and
its experience has been fascinating. The govt. can get a lot of valuable inputs
from SEWA. What it should NOT do is another surgical strike at the midnight
hour.
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