Universal Basic Income Program to Struggle Rising Poverty and Inequality


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Universal Basic Income or commonly referred to as UBI, is an idea that has not sprung up recently, but it was pondered over and proposed in the late 18th century. UBI is a program, where the government of a country will give its citizens unconditionally, a fixed sum of money, so as to meet the basic daily requirements.

The rising poverty and inequality has made us question the effectiveness of the current subsidies and welfare schemes offered by governments across the globe. As result many experiments are going on in countries such as Finland, Kenya, Canada and Netherlands. It is not just the governments of developing or under developed countries that have welfare schemes for its people, but developed countries also have such programmes to help its underprivileged population, for example the United states of America has over a hundred and twenty such programmes. Despite such measures taken, the gap between the rich and poor is increasing in developed nations and developing countries haven’t been able to stop starvation. The problem with these schemes is that there are leakages and many of the times people who are in the most need of it, are not able to avail it. Because of its poor planning and implementation such schemes are marred by inefficiencies and has forced strategist to rethink the current redistribution of wealth.

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Universal Basic Income is considered as the best insurance policy by many and will improve the quality of life. It would give people the freedom to choose what will better their lives rather than having the government decides it for them. According to Abraham Maslow’s “Hierarchy of Needs”, people would be able to unleash their talent and be free to pursue higher interests without having to think about basic survival. Results from the Canadian experiment showed that the cases of domestic abuse decreased, fewer people needed to be hospitalized and more teenagers graduated college. Former Chief Economic Advisor to the Government of India, Arvind Subramanium stated that under the UBI scheme for India, the government would deposit around 10,000-15,000 rupees in the beneficiaries account and that there would be no need for some of the social security subsidies. Currently India has an entitlement based subsidiary system and estimated total spending of around 3600 billion rupees ($60 billion). Some of the well-known schemes include Food Security (PDS), MGNREGA, and Child Development (ICDS). MGNREGA which provides job to the unemployed is highly uncertain, a traditional-skill killer, and also a cause of farm-hand shortage. A large part of the PDS ration is sold in the black market, creating a shortage of food for the needy. The MDM (Mid Day Meal) which offers food to the children in school is becoming infeasible.

Compared to the UBI, the system of subsidies is more complex and primitive. The challenge is in the designing of the UBI such that it does not put a burden on the fiscal resources, else it may increase the prices of goods and the effect would be negative. Some economic journalists believe that if implemented correctly, the UBI may be cheaper than allocating subsidies. The outcome of the seven independent experiments conducted across four continents will play an important role in instituting UBI.

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