• Switzerland in a referendum recently rejected the idea of UBI.
  • The basic idea of a UBI is that everybody should be given a basic minimum income as an entitlement and not as compensation for work.
  • Benefits:
    • UBI would help to partly offset the rapid rise in inequality observed in recent years.
    • As a safety the UBI would be the simplest and most effective.
    • Robots:
      • Another point stems from the potential obsolescence of work in a robotized world. As robots take over more and more of the tasks hitherto performed by human beings, robotized production systems will be capable of producing goods of mass consumption on an almost unlimited scale.
      • On the other hand, human workers no longer required or paid to do most jobs would lack the purchasing power to buy these goods of mass consumption.
      • If mass consumers lack the purchasing power to buy the goods produced for mass consumption, whether for reasons of income inequality or work obsolescence, then the markets for mass consumer goods will collapse.
      • The only way out of this impasse of chronic under-consumption is to revisit the link between income and work, hence UBI.
    • Better Targeting:
      • According to the Shanta Kumar committee report, nearly half the subsidized foodgrains distributed through the targeted public distribution system (TPDS) for BPL families do not reach the intended beneficiaries.
      • UBI would completely do away with targeting and all the challenges that come with it.
        • Leakages would also be minimized if UBI is administered using the JAM (Jan Dhan Yojana, Aadhaar and mobile connectivity) trinity, the IT-enabled technological innovation.

 

  • Problems:
    • Expensive: Would entail a large budget. Some studies peg it at as much as 8-10% of GDP. However, the cost can be simultaneously made up for with savings from leakages in ongoing subsidies as well.