Context:
∙ Recently, the Indian National Congress party pitched for its NYAY scheme, if voted to power in the upcoming 2024 general elections.
About
∙ NYAY is an acronym for Nyuntam Aay Yojana (or Minimum Income Scheme), and includes a guaranteed payment of Rs 72,000 to each eligible family annually.
∙ In 2018, the incumbent government had rolled out a similar scheme called PM-KISAN, billed as the world’s largest direct benefit transfer scheme for farmers and involved “an income support of 6,000/- per year.
Nyay/PM-Kisan vs UBI
∙ While these schemes resemble UBI, they are not exactly the roll out of Universal Basic Income (UBI).
∙ Under a UBI, the government gives a “basic” income to every citizen in the country, universally and unconditionally, from the richest person to the poorest one, regardless of whether they work or not.
∙ But, the government also rolls back all types of subsidies in UBI — from food to fertiliser to medical bills.
∙ Nyay and PM-KISAN are different from UBI in three aspects.
∙ First, they are not accompanied by removal of all the existing subsidies.
∙ Secondly, the amount is much smaller than what anyone can consider to be the minimum or basic income that everyone needs to have to live a decent life.
∙ Lastly, the scope of the schemes is limited to a section of Indians; these are targeted schemes, not universal ones.
Problems with UBI
∙ While Universal Basic Income (UBI) holds promise as a revolutionary social policy, it faces several potential challenges and criticisms.
Cost and sustainability:
∙ Affordability: In rich countries such as Switzerland (refused to adopt UBI), the UBI amount is quite a lot even though the population may be small.
∙ In relatively poorer countries, the population is too large even if the UBI amount may be smaller. Either way, affordability is a massive stumbling block.
∙ Economic impact: The other problem is the reduction of existing subsidies, and raising of taxes to fund the UBI.
Practical challenges:
∙ Administrative complexity: Implementing a UBI scheme requires effective infrastructure and bureaucracy to handle registration, verification, and distribution of payments.
∙ Political feasibility: Announcing the removal of existing subsidies is almost certain to create a political backlash.
Uncertainties and unintended consequences:
∙ Behavioral changes: The impact of UBI on work ethic, entrepreneurship, and social behavior is unclear and could have unforeseen consequences.
∙ Dependence and disincentive to work: Concerns exist about potential dependency on UBI and reduced motivation to work, especially for low-skilled workers.
Way Ahead:
∙ The feasibility and effectiveness of UBI depend on careful design, implementation, and ongoing evaluation.
∙ Addressing the potential challenges and maximizing the benefits requires thorough research, public debate, and pilot programs to gather evidence before widespread implementation.
