NEW DELHI — The concept of a Universal Basic Income (UBI) has been around for hundreds of years. Recently, it has re-emerged as a potentially viable solution to poverty. UBI is a form of redistributive income given to citizens regardless of their existing income. It is controversial because of its debatable equitability. The opposition has voiced concerns about those who might need to receive government help above the amount distributed by the UBI.
As interest in Universal Basic Income increases and more research is done on the subject, a clearer picture of its merits and dangers appears. After India released its 2016-2017 Economic Survey, which considered the merits of using UBI to combat Indian poverty, the world took notice.
According to the survey, the misallocation of capital to the Indian poor is a common problem. There are times in which the poorest Indian districts do not receive as much funding as other better-off districts. This is done unintentionally but is a rectifiable consequence of India’s complicated distributive system.
While using an UBI system to replace conventional welfare, “exclusive errors” in funding to the districts that need it the most would be less likely to occur. Furthermore, “out of system leakages” would be less likely to occur in an UBI system. In other words, the Economic Survey holds that an UBI system would be more effective at combatting poverty in India than existing benefits. In fact, as stated in The Economist, absolute poverty is expected to be reduced from 22 percent to less than 0.5 percent if India switched to a predominately UBI based system.
India’s Economic Survey comes years after two pilot UBI projects were launched in 2010. The Madhya Pradesh Unconditional Cash Transfer (MPUCT) project distributed monthly grants to eight villages in the Madhya Pradesh region, and Tribal Village Unconditional Cash Transfer (TVUCT) project distributed grants to one village for comparison purposes. The dollar amount distributed was that which would put households just above the poverty line. These projects went on for about a year before results were gathered.
The resulting data is tremendously positive. Take-up of the basic income grants happened quickly. More people than ever opened bank accounts. Saving increased. More home repairs were made. Children’s weight for their age improved. People were more likely to have enough money for their daily food needs. Households reported a lower number of common illnesses, and some of the cash grants were used to secure medical treatment. School enrollment went up, and there was an increase in the number of people in the labor force.
These studies demonstrate a viable strategy a state’s government can use to combat poverty. Whether Universal Basic Income maintains the short-lived nature of a fad will become apparent as it receives increased scrutiny.
– Rebeca Ilisoi