Universal Basic Income

THE QUAGMIRE OF UNIVERSAL BASIC INCOME

-by Neha Maria Antony

Thomas More’s ‘Utopia’ offers us a glimpse of a utopian world, where the benevolent state hands out a standard amount of money to all who fall under its care, no strings attached. This seemingly ‘utopian’ concept, often termed as ‘universal basic income’ (UBI) along with the plethora of debates that rage around it have been revived time and time again. Particularly in the economic turmoil caused owing to the pandemic, several jurisdictions have floated and implemented UBI schemes with some success reigniting  the portrayal of UBI  as both an extension of the right to live as well as an economic flounder.

Understanding UNIVERSAL BASIC INCOME

In its most watered-down form, UBI is a refined term for free money. The amount given may be determined on the basis of reasonable standards of living and is often pegged as the amount needed to live just above the poverty line. The IMF supports an understanding of the UBI as an ‘income support mechanism typically intended to reach all (or a very large portion of the population) with no (or minimal) conditions.’

Weighing UBI – Benefits and Potential Pitfalls

While the prospective benefits of UBI range from poverty alleviation, better standards of living, economic assistance unfettered by administrative chains and red tape, much vitriol is spewed against it. Having a guaranteed source of income to sustain the basic needs of life might encourage people to simply quit working or searching for employment and live off the UBI alone. It would severely undermine the intrinsic value of work. In most models of UBI, there is no work requirement, which can be reasonably expected to severely cripple the labour market. We also need to consider the costs involved as one of the biggest questions marring a full-fledged adoption of the UBI is the source of the said money. The contention that a job guarantee is a much more effective offer than a basic income has also been vehemently raised.

The social implications of the same, particularly its effect on bringing about equality have also been emphasised. The lofty goals sought to be achieved by the UBI include the alleviation of poverty owing to the fact that UBI presents itself as a means to give a leg up to the weakest sections of society who struggle for their most basic needs and thus would fall under the ‘right to basic income as an integral part of substantive dignity’. UBI is also sought out as a measure to mitigate income inequality while simultaneously acting as a booster shot for some semblance of financial stability.

The implementation of UBI will result in a paradigm shift in worker-employer relations, and it can be reasonably expected that the large scale exploitation of workers may come to change, labour contracts will become more voluntary and workers will no longer have to put up with heinous working conditions as the option of exit can now be freely chosen. However, this needs to be taken with a pinch of salt as authorities like the ILO have noted that ‘inequality would also increase if employers’ contributions to social security were cut. ’Another compelling argument lies in that it allows for greater freedom. By freeing up money available to people, more of them are truly able to do what they wish to do rather than being tied down by the societal, economic or educational backgrounds they were born into.

UBI is also touted as an effective step for bridging the gap between genders and bringing in gender equality. This offers economic assistance to women who carry out unpaid domestic work and thus boost their social standing. It is also vital to note that UBI would provide a safety net and remove the anxiety that many young people face regarding employment leaving everyone on an equal footing, at least at the starting point.

Working in a UBI Policy – The Question for India

In so far as India is concerned, an IMF Working Paper considered the plausibility of implementing UBI in India. Among other things, the paper examined a cost-benefit analysis of replacing the existing systems like the Public Distribution System (PDS) and the recent energy subsidies with a UBI plan. It is also pertinent to note here that India did consider the idea of UBI in the 2016-17 Economic Survey though nothing has materialised from the same.

Though practical experiments in UBI carried out in various settings across the world have proved to be successful in many respects, it would be unwise to hail it as a panacea. In so far as its effects on equality are concerned, ‘UBI is an individualistic, monetary intervention that does not in itself encourage social solidarity or address the underlying causes of poverty, unemployment and inequality.’ A guaranteed income to those who truly deserve it, by using markers like the poverty line, employment assistance, and other incentives to those markedly affected by special circumstances like natural disasters, and using other such measures in an integrated scheme will allow for a true realisation of the aspirations that UBI stands for. Much of these are being done by governments across the world in various forms and means and strengthening the existing systems would perhaps be more successful. Rather than a blind approach which involves handing out wads of cash to all and sundry, it would be beneficial to take a more holistic approach wherein the existing systems of public economic assistance are reworked and UBI like schemes are run for the particularly weak groups. Implementation should be in concert with a system of carefully considered taxation and ideas like negative taxation and progressive taxation have been suggested in this regard. Though the UBI offers many benefits, careful consideration of its claims and detailed analysis of ground realities have to be taken into account before we take the leap especially in light of the confluence of circumstances that prevail today. This would entail a detailed economic assessment of the coffers of the state as well as adequate financial analysis tools. It is also seen that psychological factors may also come into play here, which then emphasises the need to have a region by region approach, guided by common values and supported by a staunch legal and policy framework.

Views are personal.

Image provided by the author.

ABOUT THE AUTHOR

Neha Maria Antony is a third year B.A. LL.B. (Hons.) student at the National University of Advanced Legal Studies, Kochi. 

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