Universal Basic Income (UBI) has been a topic of discussion among government policymakers and economists over the years. This socioeconomic concept, which guarantees fixed income to all beneficiaries regardless of their social status, can be transformative in tackling poverty and financial instability. The positive influence a UBI system can have on individuals and communities was recently highlighted through the WorkFREE pilot project initiated in Telangana in 2022.
About WorkFREE Pilot Project
The WorkFREE pilot project is a collaborative effort between the University of Bath, Montfort Social Institute, Hyderabad, and the India Network for Basic Income. Funded by the European Research Council, under this project, an adult receives Rs 1,000, and a child gets Rs 500 each month for 18 months. It aims to support 1,250 residents across five slums in Hyderabad. Since its initiation, there have been significant positive effects on the residents. Many used the granted funds to start new ventures, buy essentials, and pay utility bills.
Other Similar Projects
A project similar to the WorkFREE pilot was conducted in Delhi and Madhya Pradesh in 2011 by the Self-Employed Women’s Association (SEWA). Around 100 families living below the poverty line received Rs 1,000 monthly.
Understanding Universal Basic Income (UBI)
UBI is a welfare proposal wherein all beneficiaries receive a guaranteed income without any conditionalities. This concept is intended to address poverty, replace other need-based social programs, and reduce bureaucratic involvement.
Benefits of UBI
UBI provides a multitude of benefits. It alleviates poverty, improves health conditions by reducing stress related to financial instability, simplifies the welfare system by replacing various target-based programs, and grants financial security to individuals. Additionally, it acts as an economic stimulant by injecting money directly into communities, thereby boosting local businesses and job opportunities.
Drawbacks of UBI
Despite its potential advantages, UBI also poses certain challenges. It is expensive to implement, possibly leading to higher taxes or increased debt. It can potentially push people towards complacency, reducing their willingness to work or acquire essential skills and education. Moreover, there are risks of inflation since businesses may adjust their pricing strategies given the additional income available in the market.
Alternatives to Universal Basic Income
Several alternatives to UBI exist, including Quasi UBRI, Direct Benefits Transfers (DBT), Conditional Cash Transfers (CCT), other income support schemes, employment guarantee schemes, and universal basic services. Each of these has specific features intended to tackle poverty and financial distress while promoting empowerment and inclusion among different social groups.
Moving Forward with UBI
To ensure that UBI does not discourage individuals from working and to enhance its impact, the disbursed amount must be balanced carefully. Alongside UBI, robust support systems like universal healthcare and education can play a complementary role. While existing welfare schemes align with UBI principles, they often target specific demographics, leaving room for potential exclusion. To reduce such mishaps and increase efficiency, implementing UBI is suggested as a more effective option.
