INTRODUCTION TO UNIVERSAL BASIC INCOME (UBI)

• Economic Survey 2016-17: UBI was proposed as a solution to poverty and income inequality.
• Fiscal Challenge: A direct cash transfer of Rs 7,260 per person was estimated to cost 4.9% of GDP, making it a daunting fiscal challenge.

DIRECT BENEFIT TRANSFER (DBT) AS A PRECURSOR TO UBI

• Launch of DBT: Introduced in January 2013, DBT aims to reduce leakage, ensure timely transfers, and promote financial inclusion.
• JAM Trinity: Jan Dhan accounts, Aadhaar, and Mobile phones enable DBT’s success.
• Current Reach: Over 315 schemes across 53 ministries, disbursing Rs 38 trillion cumulatively, including Rs 3 trillion in the last fiscal year.
• Beneficiary Numbers: In 2023-2024, about 700 million unique beneficiaries received cash transfers, while in-kind DBT beneficiaries exceeded one billion.

CASE STUDIES OF DBT SCHEMES

• Maharashtra’s Ladki Bahin Scheme (LBS):
  • Provides Rs 1,500 to eligible women aged 21-65.
  • Received over two crore applications with an estimated annual cost of Rs 46,000 crore.
  • Aims to empower women and reduce poverty.
• Madhya Pradesh’s Ladli Behena and Ladli Lakshmi Schemes:
  • Ladli Behena Scheme (2023): Targets married women, offering financial assistance for empowerment and skill development.
  • Ladli Lakshmi Scheme (2007): Focused on the girl child, providing a deferred benefit of Rs 1 lakh at age 21, aimed at correcting the skewed sex ratio.

EVOLVING TOWARD UNIVERSAL BASIC INCOME (UBI)

• Scaling Existing Schemes: Integrating existing cash transfers (e.g., PM Kisaan) into UBI can enhance fiscal viability.
• Universal Coverage: Simplifies administration, reduces exclusion errors, but risks inflationary pressure.
• Targeted UBI Pilot:
  • Focus on vulnerable groups (e.g., elderly, poor women, disabled).
  • Could be trialed in specific backward areas or districts to refine the model.

PHILOSOPHICAL CONSIDERATION OF BASIC INCOME AS A RIGHT

• Extension of Rights: Basic income can be viewed as a natural extension of existing entitlements to food, education, and employment.
• March Toward Modified UBI: The proliferation of cash transfers and in-kind benefits across states indicates progress towards a UBI-like system focused on women and vulnerable populations.

CHALLENGES

• Fiscal Constraints: High cost of UBI (4.9% of GDP) and budgetary pressures
• Inflationary Risks: Potential inflation and indexation challenges
• Targeting and Exclusion Errors: Inaccurate targeting and exclusion of vulnerable populations
• Administrative and Technological Hurdles: DBT infrastructure, fraud, and leakages
• Political and Social Opposition: Resistance to scaling down existing schemes and social perceptions

WAY FORWARD

• Phased Implementation: Pilot programs and gradual scale-up
• Strengthening DBT Infrastructure: Improving JAM coverage and monitoring mechanisms
• Fiscal Reforms: Rationalizing subsidies and tax reforms
• Targeted Approach: Opt-out mechanism and focus on vulnerable groups
• Public Awareness and Stakeholder Engagement: Awareness campaigns and policy dialogue
• Continuous Evaluation and Adaptation: Regular impact assessments and feedback mechanisms