Sikkim’s Chief minister has announced that, if elected, he will provide a ‘Universal Basic Income’ (UBI) to all 7 lakh state citizens by 2022. This, basically, means the Sikkim Government might end up giving every registered resident of the state a nominal amount of money periodically, for free. The Chief Minister claims that he will finance this with the surpluses the state government gets as its share from central hydel-power projects in the state. Though the feasibility of this needs to be established, the concept of UBI is clearly back in the limelight.
As many of us already know, the Economic Survey of 2016-17 has a whole 40 pages(173 - 212) on the topic (refer: https://www.indiabudget.gov.in/es2016-17/echapter.pdf) and it clearly defines and explains everything about Universal Basic Income. However, some doubts still plague the concept. Here’s an attempt to address them…
Can we afford it?
Free money for everyone seems completely bonkers at first, but the fact is the government leases out resources common to us all and makes a lot of money out of it. For example, the very air around us is leased out to telecommunications companies to relay their signals over. What the government does with this money is not based on equality but on requirements and policies. Theoretically, it is possible to fund UBI in India and bring equality into the equation, even though we are still a developing country. In reality though, the jury is still out on the finance. Several existing schemes and ‘yojnas’ might have to be revoked(which is bad for the polls). However, the true cost (beyond just money) of such a measure can only be investigated once it is implemented.
Will it make people lazy?
Several trials done at different locations around the world suggest that this is not the case. However, the people receiving money probably knew the trials were only going to last a couple of months. The behavioural response in this case could be different from that to a more permanent government policy. Hence, it’s only rational to be skeptical. The amount every person will receive is a critical factor in determining whether people will become lazy or not. If it’s too small, it’s no help at all and if it’s too large, it’s definitely going to make many people quit work.
Is it a ruse?
Like all political moves, UBI might very well be a strategy to gain an advantage during elections. Voting out a government that hands out ‘free money’ doesn’t sound like an idea the beneficiaries might support. Unless, of course, the party in opposition is willing to continue the scheme or do better. Much like several other programs aimed at helping the needy, UBI could become something with a political ‘Lakshman Rekha’ around it. If the word ‘experiment’ is used as anticipatory bail before implementing UBI, there could be a way out if it indeed turns out to be infeasible and/or damaging to social health.
Why does the Silicon Valley speak highly of UBI?
To know why Zuckerberg and several others in the Bay Area support UBI, it is essential to think like a capitalist. Most businesses need a stable government that doesn’t change it’s policies every few years. A government that brings UBI is likely to be highly favoured among those in the majority vote-bank, thus extending its time in power. Also, since the funds to maintain the scheme is heavily dependent on the taxes paid by large companies, they get a significant upgrade in terms of their leverage in the ‘lobby’. The government could lose its high-ground; not that it has much at present. Moreover, any young person with a thousand free bucks every month in his/her pocket is going to get more internet or buy more stuff online. This is a good plus for companies whose sole agenda is ‘more people in front of more screens for more time’.
Is it right for India?
In a country where the majority of bureaucracy is corrupt and/or blatantly misuses authority, it is always a good idea to bypass all of it and provide help directly to the people in need. The idea of every helpless,hungry human being (with a bank account) getting a respite, however small it may be, is heart-warming. On the other hand, the concept of giving Mr.Ambani Rs.1000 a month is just comical. The difference between equality and equity comes to the fore here. Several layers of bureaucracy came into existence for the very purpose of directing funds to those in actual need. If at all we do find a way to make it viable, UBI could come with an ‘opt out’ option - much like the LPG subsidy. Will it help transform us for the better? - your guess is as good as anybody’s!