Chandigarh News
Published on Jan 09, 2023
The state should find ways and means to execute the universal basic income (UBI) as a new social contract in a statutory framework for the early development of its human capital and secure its future economic growth
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A PDS shop in India helps in keeping food affordable and accessible to the poor. (HT File photo)
BySuresh Kumar
The current political debate on freebies in the country has created hope for a reduction, if not the elimination, of subsidies. Although proposed by politicians, the freebies, whether as subventions or direct financial assistance, may be contextually relevant and need-based - poverty and hunger or could be an outcome of competitive politics and populism. Economists and sustainability professionals questioned subsidies for being unsustainable, but political policy ambitions prevail even if these are against the planet, people, and economy.
Most of the subsidies in our country aim to cater to the persistent problems of poverty, hunger, and unemployment. The country ranked 107 out of 121 countries in the Global Hunger Index 2022, with its child-wasting rate at 19.1%. As per the World Bank Report (2018), the Human Capital Index (HCI) of India is 0.44, which means that only 44% of children born in the year 2018 can expect to attain productivity in the labour market by the age of 18 years, given the risks of poor health and education that prevail in the country. It is thus losing 56% of its future economic capital with the present level of investments in education (3.8% of GDP) and health (3.4% of GDP). A large segment of our population does not earn a universal basic income (UBI) to provide for the financial requirements for a dignified living, which are, however, not defined at any level and may vary in different contexts and areas.
UBI necessary to achieve social justice
Universal basic income (UBI) means unconditional regular monetary income, payable to all adult individuals. Governments should guarantee a minimum earning to an individual enabling him to the essential goods and a life of dignity. UBI is necessary to achieve social justice, poverty reduction and better education and skills. It reduces the leakage of resources and the burden of compliance and improves efficiency in implementation.
The subsidies or freebies should only be for those who do not earn a basic income. These should be targeted to fill the income gap for the deserving and deprived but should be self-limiting, non-discriminatory, and non-interfering to achieve the long-term goal of the UBI for all. These should enable people to earn their living. However, not all subsidies go to the deserving poor. Free-of-cost water and electricity are examples where even those capable of paying are getting largess from rulers in some states. However, the subsidies to prevent hunger and famines, promote financial inclusion, and skills for self or gainful employment may be difficult to avoid. Food subsidies are nearly global and necessary to keep food affordable and accessible.
Free or subsidised insurance, credit, and pensions for poor, deprived, and incapacitated persons focus on financial inclusion and social security. EGS, RLEGP, NREP, TRYSEM, IRDP, and now NREGA aimed to create local jobs for the poor, illiterate, and unskilled people. The recent efforts on direct cash transfers to small and marginal farmers provide for the income gap.
Need to improve efficacy of systems
However, the existing subsidy programmes have not achieved the stated objectives, with poverty and illiteracy remaining persistent. The political utility of these programmes has also been transient. The lack of transparency, leakages, and sluggish delivery of justice are some of the issues in implementation. These require systemic changes and structural reforms to evolve new social security systems targeted at the UBI. Digital public goods, which are non-excludable and non-rivalrous, such as Aadhar, should be used to improve the efficacy of the systems and programmes.
The debate on freebies started because even the new generation of politicians, expected to be more transparent, pragmatic, and logical, seems to be repackaging populism and using political authority to mobilise funds to garner votes. It did not augur well for the nation, and the traditional politicians, challenged by the new generation, realised the need to contain the rising trends of freebies, commonly referred revdis - traditional sugar candy in north India.
Fits into democratic, socialist edifice of constitution
The leftists who propagate a welfare state prefer direct subsidies to reduce poverty and hasten equity and equality in the country. They feel it will redistribute resources and financially empower people to attain quality education and health. Of course, they prefer the UBI as it is non-stigmatic for being universal and impersonal. The rightists also agree with it as a measure to redistribute wealth, but the capitalists consider subsidies and even the UBI an avoidable burden on national resources. They feel it is a disincentive to work and will promote a work-shy society. Some even say that it will encourage drug abuse and alcoholism. The UBI has, however, been tried successfully in the Gyeonggi Province of South Korea. It was considered a tool for social resilience.
The UBI, as the new social contract, fits into the democratic and socialist edifice of our constitution, which envisages equity and equality for all. Shortage of public resources should not make the poor wait on empty stomachs and allow the rich to avail opportunities created by the growth. The state should find ways and means to execute the UBI as a new social contract in a statutory framework for the early development of its human capital and secure its future economic growth. It should innovate to overcome the constraint of resources and tax the rich for higher carbon emissions and e-commerce at the destination of goods and services. Repurposing the existing subsidies and greater synergy in the education, health, food, and economic policies should lead to new ways to achieve the UBI and shun mere populism.
sureshkumarnangia@gmail.com
The writer is a retired Punjab-cadre IAS officer. Views expressed are personal
BySuresh Kumar
The current political debate on freebies in the country has created hope for a reduction, if not the elimination, of subsidies. Although proposed by politicians, the freebies, whether as subventions or direct financial assistance, may be contextually relevant and need-based - poverty and hunger or could be an outcome of competitive politics and populism. Economists and sustainability professionals questioned subsidies for being unsustainable, but political policy ambitions prevail even if these are against the planet, people, and economy.
Most of the subsidies in our country aim to cater to the persistent problems of poverty, hunger, and unemployment. The country ranked 107 out of 121 countries in the Global Hunger Index 2022, with its child-wasting rate at 19.1%. As per the World Bank Report (2018), the Human Capital Index (HCI) of India is 0.44, which means that only 44% of children born in the year 2018 can expect to attain productivity in the labour market by the age of 18 years, given the risks of poor health and education that prevail in the country. It is thus losing 56% of its future economic capital with the present level of investments in education (3.8% of GDP) and health (3.4% of GDP). A large segment of our population does not earn a universal basic income (UBI) to provide for the financial requirements for a dignified living, which are, however, not defined at any level and may vary in different contexts and areas.
UBI necessary to achieve social justice
Universal basic income (UBI) means unconditional regular monetary income, payable to all adult individuals. Governments should guarantee a minimum earning to an individual enabling him to the essential goods and a life of dignity. UBI is necessary to achieve social justice, poverty reduction and better education and skills. It reduces the leakage of resources and the burden of compliance and improves efficiency in implementation.
The subsidies or freebies should only be for those who do not earn a basic income. These should be targeted to fill the income gap for the deserving and deprived but should be self-limiting, non-discriminatory, and non-interfering to achieve the long-term goal of the UBI for all. These should enable people to earn their living. However, not all subsidies go to the deserving poor. Free-of-cost water and electricity are examples where even those capable of paying are getting largess from rulers in some states. However, the subsidies to prevent hunger and famines, promote financial inclusion, and skills for self or gainful employment may be difficult to avoid. Food subsidies are nearly global and necessary to keep food affordable and accessible.
Free or subsidised insurance, credit, and pensions for poor, deprived, and incapacitated persons focus on financial inclusion and social security. EGS, RLEGP, NREP, TRYSEM, IRDP, and now NREGA aimed to create local jobs for the poor, illiterate, and unskilled people. The recent efforts on direct cash transfers to small and marginal farmers provide for the income gap.
Need to improve efficacy of systems
However, the existing subsidy programmes have not achieved the stated objectives, with poverty and illiteracy remaining persistent. The political utility of these programmes has also been transient. The lack of transparency, leakages, and sluggish delivery of justice are some of the issues in implementation. These require systemic changes and structural reforms to evolve new social security systems targeted at the UBI. Digital public goods, which are non-excludable and non-rivalrous, such as Aadhar, should be used to improve the efficacy of the systems and programmes.
The debate on freebies started because even the new generation of politicians, expected to be more transparent, pragmatic, and logical, seems to be repackaging populism and using political authority to mobilise funds to garner votes. It did not augur well for the nation, and the traditional politicians, challenged by the new generation, realised the need to contain the rising trends of freebies, commonly referred revdis - traditional sugar candy in north India.
Fits into democratic, socialist edifice of constitution
The leftists who propagate a welfare state prefer direct subsidies to reduce poverty and hasten equity and equality in the country. They feel it will redistribute resources and financially empower people to attain quality education and health. Of course, they prefer the UBI as it is non-stigmatic for being universal and impersonal. The rightists also agree with it as a measure to redistribute wealth, but the capitalists consider subsidies and even the UBI an avoidable burden on national resources. They feel it is a disincentive to work and will promote a work-shy society. Some even say that it will encourage drug abuse and alcoholism. The UBI has, however, been tried successfully in the Gyeonggi Province of South Korea. It was considered a tool for social resilience.
The UBI, as the new social contract, fits into the democratic and socialist edifice of our constitution, which envisages equity and equality for all. Shortage of public resources should not make the poor wait on empty stomachs and allow the rich to avail opportunities created by the growth. The state should find ways and means to execute the UBI as a new social contract in a statutory framework for the early development of its human capital and secure its future economic growth. It should innovate to overcome the constraint of resources and tax the rich for higher carbon emissions and e-commerce at the destination of goods and services. Repurposing the existing subsidies and greater synergy in the education, health, food, and economic policies should lead to new ways to achieve the UBI and shun mere populism.
sureshkumarnangia@gmail.com
The writer is a retired Punjab-cadre IAS officer. Views expressed are personal
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