India is not ready yet for Universal Basic Income
Besides the high costs, the execution of this concept on a national scale would face a myriad challenges
Exponential technological innovations have made it possible for us to envision a future with abundant resources. Unfortunately, the rapid adoption of disruptive technologies such as Artificial Intelligence, 3D printing and robotics has cut down our human capital needs. The trends in the cradle of global technological innovations, the Silicon Valley, could be seen as an ominous harbinger of our future, with the small concentrated area housing five of the eight most valuable companies in the world, with a cumulative market cap of almost $3 trillion; but with the tech-titans employing just under 700,000 between them, indicating the distressing trajectory of our workforce requirements.
Although we haven’t been able to yet create a redistributive system befitting this age of limited job opportunities and copious resources, the most spoken about solution to date is the introduction of a Universal Basic Income (UBI), a regular and fixed amount for the underprivileged from the State.
While the concept of a basic income has been spoken of from the middle of the 19th century, with countries like the US and Canada later experimenting with a negative income tax in the 1960s and 70s, the idea started gaining swift traction from 2016, with several countries including Kenya, Brazil, Finland, Netherlands, and Scotland starting small-scale experiments in basic income.
Back in 2010, India had a trial where unconditional monthly cash transfers between ₹100 and ₹300 were provided to over 6,000 people in Madhya Pradesh. Unsurprisingly, the beneficiaries showed substantial improvements in their food sufficiency, and wellness levels. Our 2016-2017 Economic Survey had proposed a restricted UBI of ₹7,620 /year, with poverty and hunger alleviation the stated objective. It would, however, cost at least 5% of our GDP. Besides high costs, the execution of this concept on a national scale anywhere would face a myriad challenges, including the need to overhaul the existing social security and welfare systems; and the creation of unpredictable changes in the labour market.
India, in the near future, can ill afford another radical structural economic reform. Effective digitisation could be a practical stop-gap measure, with Aadhaar linkage, along with the percolation of banking facilities to the last-mile reducing pilferage; and could proficiently target our existing subsidies and transfers towards the intended beneficiaries. Nonetheless, our high levels of poverty gives us strong grounds to design an alternative redistributive solution