The Sikkim government has proposed the idea of introducing the Universal Basic Income (UBI) scheme. This could position Sikkim as the pioneering Indian state to adopt such a scheme. An endorsement of UBI was also seen in the Economic Survey 2016-17.
International Experiences with UBI
Countries worldwide have experimented with UBI in various forms. For example, Finland conducted a two-year experiment on the effects of UBI on unemployed citizens from 2017 to 2019. Meanwhile, Ontario in Canada began testing unconditional income guarantee by enrolling participants from three province areas for three years of guaranteed income. Some cities in the Netherlands have initiated municipal-level trials for UBI, and Spain’s Barcelona has considered several modifications to its anti-poverty programs, including unconditional cash payments.
Understanding Universal Basic Income
UBI is a regular, periodic cash payment provided unconditionally to all citizens individually, without any work or willingness to work requirement. The primary features of such systems include regular periodic payments (not one-time grants), cash transactions (not food vouchers or service coupons), individual payments, universality (inclusion of all citizens), and unconditionality (no prior condition).
Advantages of UBI
There are several benefits to implementing UBI. These include promoting social justice, reducing poverty, allowing individuals a greater degree of agency, ensuring a minimum living standard, improving administrative efficiency, providing insurance against shocks, and offering psychological advantages.
Key Facts on UBI
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| Country | Experiment Description |
|---|---|
| Finland | Two-year experiment on effects of UBI on unemployed citizens during 2017-2019 |
| Canada | Three-year guaranteed income test in Ontario |
| Netherlands and Spain | Municipal-level trials for UBI in selected cities |
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Disadvantages of UBI
Despite its multiple advantages, UBI also has potential drawbacks. These include reducing the incentive to work, creating gender disparity in spending control, stressing the banking system due to the current financial access level among the poor, and exposure to market risks such as fluctuating inflation rates.
Resources for UBI in Sikkim
Sikkim presents an ideal setting for testing UBI. It exports almost 90% of the 2,200 MW produced by its hydroelectric projects, ensuring a consistent revenue stream that other states typically lack. Its literacy rate is 98%, with a Below Poverty Line (BPL) population significantly below the national average. Sikkim plans to cut most subsidies before launching its UBI scheme. This approach aligns with the Economic Survey 2016-17, which suggested that subsuming other schemes is crucial for managing UBI funds.
Way Forward
The 2017 Economic Survey described UBI as “a conceptually appealing idea” and a potential alternative to poverty-targeted social welfare programs. UBI ideally promises an uncompromised social safety net that ensures a dignified life for everyone. This concept is expected to gain traction in a global economy riddled with uncertainties due to globalization, technological changes, and automation.
