UNIVERSAL BASIC INCOME: HAS ITS TIME COME ?

    

   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.