Professor Maitreesh Ghatak, senior economist at the London school of economics (LSE), has made a strong case for Universal Basic Income (UBI).
Professor Ghatak, who was delivering the first International Centre Goa (ICG) annual lecture on the topic-“Universal Basic Income: Feasibility and Desirability here on Thursday, explained how the UBI differed from the minimum income guarantee (MIG) scheme which was presently being discussed in political circles.
According to Professor Ghatak in a typical UBI scheme, the government would make a fixed cash payment every month ( let us INR 2,000) to every individual adult in the country irrespective of his/her financial status. Hence, both a poor person and a rich person would get the same amount of money every month. Ghatak was the opinion that such a scheme avoided the cumbersome process of identifying the poorest people, thereby avoiding the cost on excessive manpower and bureaucracy.
Ghatak felt that UBI was best suited to reduce abject poverty and hunger. However, he cautioned that UBI was not a ‘magic bullet’ which could replace all poverty alleviation programmes. “UBI at best can complement other welfare schemes in solving poverty,” Ghatak said.
However, for a scheme like UBI to work, Ghatak said, ‘Tax laws should have provisions (like a cess), which would ensure that you contribute to a UBI scheme if your income is more than a threshold limit. Effectively speaking, a rich person would be a net contributor to a scheme like this.’
On the other hand, a poor person who gains Rs 2,000 per month, will not have to pay anything because his income is less than a threshold limit. He would be a net beneficiary of such a scheme.
Professor Ghatak said a UBI scheme would be populist, if it was simply added to the budget without bringing in tax reforms. He also added that the government could not walk away from its other responsibilities like education and health to save money for implementation of UBI.
Ghatak felt that the MIG was very limited in its scope and reach. According to the economist, a MIG scheme was targeted at a specific segment of population only.
‘For example: if the government decided to give a certain amount of money to 10% poorest people in India, it would be a MIG scheme. However, Ghatak felt this was a costly process involving a lot of manpower and bureaucracy, not to forget the accompanying corruption,’ he said. (UNI)
