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MINIMUM BASIC INCOME (What are merits of the idea? (Social Justice &…
MINIMUM BASIC INCOME
What are merits of the idea?
Social Justice & Equity
Freedom of choice
Poverty alleviation
MBI has potential to reduce rural distress
Better social development
Financial Inclusion
Other advantages include administrative efficiency, gender equity (by taking individuals and not household as beneficiaries), insurance against shocks and flexibility in labor market
Challenges
Definition of basic income
difficult to reach on a consensus-based definition of ‘Basic Income
Tendulkar Committee poverty line of 33/- a day works out basic income of 12,000/- a year. It will cost 11-12% of GDP, in comparison to the existing subsidy burden of 4-4.5% of GDP
Fiscal challenges
fiscal cost
difficulty in exiting subsidies
hostility in extracting more tax revenue from wealthy
medium term fiscal risk
rising consumption
Cash vs Kind Dilemma
increasing vulnerability of women and child as finances of families are controlled by men
direct monetary benefits not being inflation proof
Targeted vs universal
Strict targeting may have its own problems like issues related to identification of beneficiaries
Basic income is no substitute for state capacity
Reduce worker productivity
Implementation Challenges
outreach of banking system
last mile connectivity
Concept of Minimum Basic Income (MBI)
a social welfare system that guarantees a basic income to households, provided they meet certain conditions. This is different from Universal Basic Income (UBI) scheme, which is a periodic, unconditional cash transfer to all citizens on individual basis, without means-test or work requirement. To that extent, the Minimum Basic Income is a conditional UBI or a quasi UBI (targeted).