16th January 2021

 Musings.......

NYAY- Universal Basic Income (UBI) 

Universal Basic Income is a government programme in which every adult citizen receives a set amount of money on a regular basis. The goals of the basic income system are to alleviate poverty and replace other need based social programmes that potentially require greater bureaucratic involvement. ( Investopedia ) 

This concept of a basic income for all has gained traction recently in Western countries as automation and Artificial Intelligence (AI) is set to replace workers across most sectors of the economy. 

The idea of providing a basic income goes back centuries. This finds mention in thr writings of one of the proponents of the American Revolution Thomas Paine, who proposed a tax plan in which revenues would provide government income to “ every person, rich or poor”. 

Martin Luther King Jr. proposed “ guaranteed income” in his book “ Where do we go from here: Chaos or Community?” published in 1967. 

The workers in fields such as manufacturing, office administration, transportation, food preparation are all threatened and susceptible to job loss due to automation. A guaranteed payment from the government can supports those left behind due to automation.  

Those who are left out of numerous government assistance programmes would also benefit out of the UBI. 

Supporters of this scheme includes Nobel laureates Peter Diamond and Christopher Pissarides to even  Mark Zuckerberg and Elon Musk, the current world tech leaders! 

Countries across the world including Finland, Canada, Scotland, Taiwan, Switzerland and Kenya have started pilot UBI trials as we speak. 

The IMF has proposed quasi -basic income schemes that leave out the well off top quarter as an effective means of alleviating poverty and hunger. 

The most interesting factor about the UBI is that world over it is being supported by the Liberal Left, who are also the supporters of the concept. The most glaring example is the Labour Party in the UK. 

It is with a glee of amusement that this writer watched the Communist social media thugs cry and complain, when the Indian National Congress Party recently announced NYAY ( Nyutam Aay Yojana) - UBI scheme in its pre poll Manifesto teaser. 

The poor social media warriors of the left mostly uneducated except for whatever they get from Party classes, failed to realise that this is a welfare scheme which is supported by the Left movement the world over. 

In fact this is one of the best economic reforms that can happen. Of course, there will be opposition as the task is not a small one.  We should realise that Mt. Everest was not conquered in a day. 

Some of the obvious disadvantages of the programme would be - 

- [ ] Triggering inflation because of increased demand for goods and services 

- [ ] Free income may make people lazy and can make work optional 

The advantages trump, the disadvantages easily and include- 

- [ ] Freedom to wait for a better job or better wages 

- [ ] Can remove the “ poverty trap” from traditional welfare programmes 

- [ ] Minimises bureaucracies 

- [ ] Stabilise the economy during recession 

- [ ] Close the Income gap 

- [ ] People will have freedom to return to school or stay home to care for say a relative 

“Poverty trap”is something that most suffer from. If they start to earn much then they will lose their benefits in the current structuring of welfare programmes   People can get out of this trap and reduce income inequality. 

With over 90% of Indian workforce in the informal sector without minimum wages or social security, regular payments through UBI can ensure sustenance of the workers engaged in informal sector. 

Components of UBI- 

- [ ] Universality 

- [ ] Periodic - payment at regular intervals 

- [ ] Payment to individuals 

- [ ] Payment in cash 

- [ ] Unconditionality- no preconditions attached with cash transfer 

Most important benefit of UBI would be eradication of “Income Inequality”. 

With the promise of NYAY, the Congress Party has once again established itself as the original Centre- Left Party in the country and has put to question the relavence of the Communists in a country like India. 

Food for Thought.......

RC