Universal Basic Income

Why in News

Recently, the positive outcome Universal Basic Income (UBI), can have on individuals and families has been highlighted through the WorkFREE pilot project, started in 2022 in Telangana.

Important Points

• Universal Basic Income (UBI) is a social welfare proposal that entails providing all beneficiaries with a guaranteed income through unconditional transfer payments. It is designed to alleviate poverty and replace other need-based social programs, potentially reducing bureaucratic involvement.

Pros of UBI:

• Poverty Reduction: UBI reduces poverty and income inequality by establishing a minimum income floor, particularly benefiting vulnerable and marginalized groups. It enables people to afford basic necessities like food, healthcare, education, and housing.
• Improved Health: UBI can enhance physical and mental health by reducing stress, anxiety, and depression associated with poverty and financial insecurity. It also facilitates access to better healthcare, sanitation, and nutrition.
• Streamlined Welfare System: UBI simplifies the existing welfare system by replacing multiple targeted social assistance programs. This reduces administrative costs and eliminates the complexities of means-testing and eligibility requirements.
• Financial Security and Freedom: UBI provides individuals with financial security and greater freedom to make choices about work, education, and personal lives.
• Economic Stimulus: It injects money directly into the hands of individuals, stimulating consumer spending and driving economic growth. This benefits local businesses, generates employment opportunities, and creates demand for goods and services.
• Entrepreneurship and Creativity: UBI empowers people to pursue entrepreneurship, take risks, and engage in creative or socially beneficial activities that might not be economically viable otherwise.

Cons of UBI:

• Cost: UBI is costly and requires higher taxes, spending cuts, or increased debt to finance it. This could potentially lead to inflation, distort the labor market, and reduce economic growth.
• Work Motivation: There is a concern that UBI may decrease motivation to work, leading to reduced productivity and efficiency. It could create a culture of dependency, entitlement, and laziness, discouraging individuals from acquiring skills and education.
• Inflationary Pressure: UBI could contribute to inflation as businesses adjust their pricing strategies to capture the additional income available in the market.
• Reliance on Government Support: UBI may lead to a reliance on government support, with some individuals becoming complacent or dependent on the basic income, reducing motivation for personal and professional growth.

WorkFREE Pilot Project: A Transformative Social Initiative

• The WorkFREE Pilot Project is a collaborative effort between the University of Bath, Montfort Social Institute in Hyderabad, and the India Network for Basic Income. It is funded by the European Research Council.