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UBI is the solution for poverty
Sunilchandra Dal | Sunday, 19 March 2017 AT 02:28 PM IST
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Free money for all, or Universal Basic Income, could prove to be the best social welfare scheme.

Every citizen should receive a fixed amount of money every month to take care of basic needs, without having to work for it. The money would be deposited in one’s bank account, without any condition whatsoever. This concept, known as Universal Basic Income (UBI), has been implemented in some pilot projects with promising results. With the increasing use of robots and Artificial Intelligence eating into job markets, a change in mindset is needed. Worldwide acceptance, though distant at the moment, is inevitable with the growing role of technology in society.

The UBI concept would rid the world of poverty and lower the crime rate. It would give people freedom to focus on what they want in life. It would be a boon to women, writers and artistes, students and entrepreneurs as well as the unemployed and the aged.

Guy Standing, a professor at the University of London, who has studied the basic income idea for 30 years, predicts that recent and ongoing experiments will go a long way to legitimise UBI as a serious policy option. UBI is much more transparent than the many current welfare programmes and could easily replace them. Basic Income Earth Network (BIEN) describes UBI as having a lower overall cost than that of the current means-tested social welfare benefits.

Kate McFarland, author at BIEN, has written in basicincome.org about a UBI project planned by an NGO in India, Cashrelief.org. From next month, every resident of one poverty-stricken village will get a certain amount of cash every month. Towards this end, Cashrelief is selecting a village in Bihar, Rajasthan or Madhya Pradesh. Taking India’s rural poverty line at Rs 972 per month, they plan to give a household of four people Rs 3,888 per month or a total of Rs 98,000, a year without exception. The total cost of the project is Rs 1 crore. The founders of Cashrelief.org were inspired by US-based non-profit GiveDirectly – which has been distributing aid in the form of UBI since 2009 and has initiated a long-term study of UBI in Kenya.

Standing, a faculty of the School of Oriental and African Studies, UK, joined Self-Employed Women’s Association (SEWA) in a project funded by UNICEF to launch pilot studies of UBI grants in India. In 2011, they launched two pilot projects. The results were presented at a conference in New Delhi in 2013.

In eight villages in Madhya Pradesh, every man, woman and child was paid a fixed amount monthly - Rs 200 for each adult and Rs 100 for each child, paid to the mother or guardian. The amounts were later raised to Rs 300 and Rs 150 respectively. The money was paid individually, initially as cash and after three months into bank accounts for 18 months. A similar project involved tribal villages. No conditions were imposed on the  recipients.

The results stated by Standing are positive: Most important, families took action on various fronts themselves. Houses were repaired, nutrition improved, there was a shift from ration shops to markets, children’s health improved resulting in improved school performance. There was an increase in production and income, negating the notion that people will not work if they get UBI.

Canada too is planning UBI projects, according to Rebecca Fortin, writing for the site Quartz. One of the reasons given is that UBI helps people shift from traditional manufacturing jobs to entrepreneurship or to study further and pick up skills in finance or other sectors.

Finland started a pilot project in January, where, for the next two years, 2,000 unemployed Finns would receive an UBI per month instead of welfare, even if they find a job.

How do governments finance UBI? UBI would substitute many existing social welfare programmes, tax rebates and state subsidies. All those budget costs would be reallocated to finance UBI.

Although basic income is paid to everyone, people, whose earnings are taxable, are contributors to the UBI scheme. This means the net cost of basic income is lower than the cost calculated as a total of monthly payments to the entire population. Studies have shown that UBI would be affordable with a 45 per cent tax rate in the Republic of Ireland or 39 per cent in the USA.

UBI could lower number of farmers’ suicides
- The Centre and state governments in India have been grappling with farmers’ suicides for decades. Loan waivers, subsidies, ex-gratia payments worth thousands of crores of rupees, all have been tried, without lasting success. The UBI would offer a definite solution, where the farmer can rely on UBI even if the crops fail.
- According to India’s Chief Economic Advisor Arvind Subramanian, UBI, which is advocated by the Economic Survey, can be put in place only after withdrawal of existing welfare schemes. For UBI to be successful, a functional Jan Dhan, Aadhaar and mobile system that ensures cash transfers directly to accounts of beneficiaries is needed, Subramanian said. So implementation of UBI could take time, but when done, farmers will have reason to cheer.

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