Fri. Mar 29th, 2024
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The Modi government is mulling over the scheme of Universal Basic Income (UBI) before the forthcoming Lok Sabha Elections.

What is Universal Basic Income?

The idea of Universal Basic Income(UBI) was given a full play in the Economic Survey of 2016-17.

The Survey observed that there is a misallocation of resources under the six major welfare schemes sponsored by the Centre. It also pointed out that the problem was more prevalent where the state capacity was weak.

So, it came up with the idea of UBI and called it a more efficient way to help the poor.

Arvind Subramanian, who was the Chief Economic Advisor then, calculated the UBI for 2016-17 as Rs 7620. International Monetary Fund(IMF) estimated the UBI of Rs 2600 at 2011-12 prices.

Under the UBI scheme, the citizens (or permanent residents) of a country receive a regular sum of money from the government. It involves a periodic, unconditional transfer of money where the social or economic positions of the individual are not taken into account.

UBI is universal in nature and is not targeted to a particular class of citizens. It also does not depend on the unemployment status of the individual.

It provides social security and dignity to all the citizens by reducing inequality and eliminating poverty. UBI also compensates for the reduced purchasing power of the people.

Only those with zero income, receive the full benefits in net terms. For the people with additional income over UBI, the net benefits will taper off through taxation.

The government is seeing UBI as a more efficient means than the one-time universal loan waiver. It is believed that UBI will help a large number of people, including small farmers, out of financial distress.

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