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Case for targeted basic income


Context
The idea of a basic income is not new

Issue: Universal Basic income

Not a new idea
Author states that the idea of a universal basic income is not a new one.

Read More: To know in detail about the historical genesis of the idea of basic income please visit this link

What Bertrand Russell wrote about basic income?
“A certain small income, sufficient for necessities should be secured to all, whether they work or not, and that a larger income — as much larger as might be warranted by the total amount of commodities produced — should be given to those who are willing to engage in some work which the community recognises as useful.” Even on finishing education, no one should be compelled to work, and those who choose not to work should receive a bare livelihood and be left completely free”

The Finland trial
Finland government has launched a pilot project guaranteeing a basic monthly income to its citizens.
• What would be done under the pilot project?
Two thousand randomly selected unemployed Finns will for the next two years receive €560 in guaranteed tax-free incomes every month. The payments will continue even when they try out odd jobs. If the pilot is successful, the programme could be extended to all adult Finns.

Read More: Finn trials

Why UBI is needed?
Economists are advocating universal basic incomes for,
• Fighting Inequality & Slow wage growth
• Countering adverse effects of advancing automation
• Countering fears that immigrants will take away jobs
• Unequal growth distribution: While free trade and technological advances have grown national incomes, not every individual is better off. There are winners and losers. Redistributive government intervention is needed so that no one is left worse off
• Safety net for the weak: To those too weak, unwell or challenged physically to pick up skills and take up jobs, guaranteed incomes provide a safety net
• Supplements earnings: Where people are skilled and employed, but receive low wages, as seen in the case of handloom weavers or in small enterprises, basic incomes can supplement earnings and support welfare.

Read More: A case for Universal Basic Income, A case against Universal Basic income

Lessons from a pilot project in India
The ‘transformative’ potential of guaranteed unconditional incomes was demonstrated in Madhya Pradesh back in 2014, which is documented in the book Basic Income: A Transformative Policy for India (2015)

What was done? Amounts equal to less than third of monthly expenditure were given to families living below poverty line

Positive impacts
Several positive impacts were noted.
• Rise in nutrition intake: pecifically, consumption of pulses, fresh vegetables and meat was up 1,000%, 888% and 600% respectively. As a result, incidence of illness dropped. Enrolment and attendance, especially among female students, in schools improved
• Equitable development: it resulted in more equitable development. On receiving the payments, marginalised individuals began exercising agency within their households and the community
• Economic benefits: There were also cursory economic benefits as villagers worked harder than before, with a number of adults engaging in two economic activities (own-account farming with small business on the side)
• Indebtedness decreased as the propensity to save increased over the pilot period.

The feasibility quotient
Author states that
• Mounting deficit: If a basic income is introduced in addition to the two statutory income transfer schemes for food (Food Security Act) and wage jobs (MGNREGS) already in place, the government’s deficit will mount.
 Reforming both schemes: Both schemes will have to be reformed by paying attention to issues like MGNREGS funding, implementation and course
• Removing all existing subsidies: A new universal basic income for all Indians won’t be affordable unless it replaces the whole multitude of programmes and subsidies currently in place

Author suggests
Author states that a much better idea would be to implement a basic income targeted towards deprived and the needy based on socio-economic census


 

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