Q.In the Indian welfare model, various subsidies are provided. “Why not to have one universal basic subsidy” that covers everything and let people decide how they want to spend it. In this context, critically analyze the rationale of UBI in India. Also suggest the practical way out to implement this idea in India?
Answer-
Approach-
- Here the introductory para could define the UBI and how India provisioned for UBI.
- Next para could be about the reasons for acceptance of UBI.
- Then a para for the challenges that could be confronted during the implementation.
- How further improvement could be made can be the concluding para.
The International Monetary Fund (IMF) defines UBI as “A cash transfer of an equal amount to all individuals in a country.” India in this regard has initiated the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme whereby transfers an amount of Rs. 6000 to the landholding farmers. Similar schemes are also initiated in Odisha, Andhra Pradesh and Madhya Pradesh to provide financial assistance to the poor farmers.
However there is demand to include the other informal sector employees as they are facing many social insecurities and jobloss fears. The various reasons cited for the acceptance of UBI are-
- The administrative inefficiency– the welfare schemes that are operational are not quite successful as are poorly implemented and targeted.
- Misallocation of resources– the budget provisions many a times fails to meet the expectations of the needy and hence many are left with minor amounts.
- There is vast difference in the income of poor and rich and hence to support the poor household.
- It will benefit to women and lead to the women empowerment.
- The informal sector could be mainstreamed and can be provided social security.
- A roadway to reduce poverty and inequality.
However the implementation isn’t smooth and many challenges can be faced including-
- Targeting and identification– the identification of the true beneficiary is must for the success of the UBI and removal of the false beneficiary for proper fund utilization.
- Centre-State cost sharing could be debatable as both would not be in the forefront to shed their revenue.
- Financial inclusion– as many still do not have bank access and UBI is possible only in bank accounts.
- Fiscal burden– many cites that this will only lead to the fiscal burden on the exchequer and rise in debts.
- Inflation– providing extra money could cause higher inflation which would make the impact of UBI negligible.
- UBI would reduce the incentive to work as everyone would get some money irrespective of work done.
However certain ways need to be found to fill the loopholes and making the UBI a great success. The Economic Survey proposes quasi-universality whereby targeting only bottom 75% of the population. It also suggests targeting only women and certain vulnerable sections that really needs financial assistance. The JAM trinity could also help to identify the true beneficiaries and remove the false personals for making the proper fund allocation.
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