Can universal basic income help usher in sustainable egalitarianism in India?

By Prof RR Prasad* 

The ongoing debate on application of Article 39(b) in the Supreme Court on redistribution of community material resources to subserve common good and for ushering in an egalitarian society has opened new vistas wherein possible available alternative solutions could be explored.
Common property resources need to be understood not just as a mere economic end, but also as a means of achieving certain normative political aspirations. Accordingly, common property resources should be analysed from two different angles, namely from both juridical and political perspectives.

Distributive justice

People have, for the most part, always been in relatively rigid economic positions from birth. It was customary to believe that a deity or nature had predetermined how financial rewards and burdens would be distributed. Distributive justice didn't gain traction until a general understanding emerged that the government could have an impact on how economic benefits and burdens are distributed. This is now an inevitable topic.
The distribution of economic benefits and burdens in societies is impacted by laws and policies that governments enact and amend on a regular basis. Nearly every modification, regardless of the impact on taxation, business, health, or education. possess distributive consequences. Consequently, the distribution of any given society varies with time, and our ability to measure this variation is growing. Crucially, societies now have to decide at all times whether to continue with the laws, policies, and other practices that they have. or alter them.
Distributive justice has been conceptualized in a wide variety of ways by theorists. Discussions concerning the configuration of social, political, and economic institutions to support the equitable distribution of advantages and disadvantages within a society have benefited from these. Most contemporary theories of distributive justice rest on the precondition of material scarcity. The necessity for principles to reconcile conflicting interests and claims regarding a fair or ethically superior allocation of limited resources stems from that precondition.

Deprived sections of the society

In Indian social systems there are large portions of people who remain deprived of their basic human needs for a decent living. They are known by various labels such as destitute, marginalized and even vulnerable. Members of these deprived sections of the society often live in an extreme condition of ill-being which results in their failure to meet and maintain basic minimum living standard. This notion of destitution is closely related to the notion of inability to meet basic needs.
India has a huge number of social protection schemes, including cash transfers, many of which have not been very effective in making a difference in the lives of the hundreds of millions of people living in poverty and vulnerability across the country. The idea of providing some basic income as an attractive option for making the social protection system more effective is now perhaps the most widely debated subject in the political economy of India.

Providing some assured basic income

Let’s examine this debate more deeply. One of the main arguments for basic income is to respond to the problem of people not having enough money to meet their needs. One of the common arguments for a basic income is to overcome the stigma of welfare for recipients, to improve their lives through social inclusion and to keep political support for the program.
Basic income is an idea that has many names (including universal basic income, basic income guarantee, guaranteed annual income or guaranteed minimum income) and many definitions. Before the term ‘Basic Income’ came into vogue, policy wonks spoke generally about a ‘Guaranteed Annual Income’, usually known by its acronym GAI.
Providing people with low incomes with more money – even relatively modest amounts – through simple cash transfers has been shown to have measurable improvements for people’s lives. A basic income can yield impressive results – reducing extreme poverty and inequality, stimulating local economies, and freeing people from having to accept slave-like working conditions simply in order to stay alive.
In 1987 the Bruntland Report ‘Towards Sustainable Development’ argued that economic development is unsustainable if it increases vulnerability to crises, and the development path that combines growth with reduced vulnerability is more sustainable than one that does not. This report, in fact, pleaded that economic and social development should be mutually reinforcing as economic development can accelerate social development by providing opportunities for underprivileged groups. “No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.” (Adam Smith).

Vulnerable groups

Vulnerable groups are those groups whose resource endowment is inadequate to provide sufficient income from any available source. As per the World Bank a vulnerable section in a population is one that has some specific characteristics that put them at higher risk of falling into poverty than others, and as far as a vulnerable group in India is concerned it mainly covers the class of population deprived from adequate livelihood.
Inclusion of the most excluded and marginalized communities in the Sustainable Development Goals: Agenda 2030 through the pledge of ‘Leave No One Behind’ is the key commitment. Researchers at Brookings Institution say India had 73 million people living in extreme poverty in May 2018. The National Sample Survey Organisation, which generates estimates of absolute poverty, has reported that there are 50 million Indians now living below the poverty line defined by the Suresh Tendulkar Committee, or one in 25. 

With this huge number of poor people living in India, how the country approaches social protection in the coming years will be very important for the global efforts to eliminate extreme poverty by 2030. It has to be ensured that no one is debarred from access to resources necessary for livelihood.

Universal Basic Income (UBI)

A universal basic income is usually conceived of as a fixed transfer given to everyone, regardless of income level. Such programs are fairly rare in practice, with prominent examples coming from places with substantial natural resource revenues. 

Common arguments that are made for universal basic income programs include their ease of implementation and low administrative costs, because the government does not have to verify income. 

Another common argument is that such programs do not distort labor supply, because the payments do not decline if you work more. Andy Stern, a senior fellow at Columbia University considers a Universal Basic Income, or UBI, the answer to rising inequality and the joblessness he sees coming from accelerating automation.
For most developing economies, a substantial universal basic income would need to be financed via domestic taxation. Given that a universal basic income would need to be financed through taxation, one can recast universal basic transfers as a particular feature of a tax schedule.

India has a huge number of social protection schemes, including cash transfers, many of which have not been very effective

The tradeoffs involved in adding a universal basic income to an income tax schedule, therefore, depend on how the rest of the income tax schedule is adjusted to satisfy the government budget constraint: both in terms of overall redistribution and how this affects potential distortionary effects from the increased marginal tax rates that introducing a universal basic income will necessitate. Thus the universal basic income will function somewhat differently in a country with a large number of people outside the tax net. 

Philip Harvey, a professor of law at Rutgers is of the opinion that “unless you can argue that you are prepared to provide a UBI that is really adequate to eliminate poverty, you’ve no business advocating a program that would leave people in poverty because it was inadequate.”
For India, we may perhaps introduce a new targeted or non-universal programme for giving assured Basic Income to persons of only the vulnerable groups. Targeted schemes appear to deliver substantial improvements in welfare compared to universal programmes. Basic income can be introduced by degrees, and in conjunction with other needed policies. 

The success of basic income all depends on how we frame it. Will it be cast as a form of charity by the rich? Or will it be cast as a right for all? Canadian politician Guy Caron calls basic income as a “top-up aimed at helping low-income Canadians to reach the ‘low-income cut-off.”

Thomas Paine was among the first to argue that a basic income should be introduced as a kind of compensation for dispossession. Hence, ‘basic income’ meaning should be construed as programs in which payments are high enough to meet basic living expenses. Implementing this idea will require political will – but it is far from impossible. In fact, some research indicates that it might be politically easier to implement than other social policies. 

Despite mixed empirical evidence at the macro level, most of the academic literature on redistribution builds on the Meltzer-Richard assumption — that, in a democracy, voters who benefit or stand to benefit from redistribution will vote for candidates who promise or effectively carry out redistributive policies. There is a growing body of literature that shows that political identities are socially constructed.
Many countries have implemented transfer programs that seek to target beneficiaries: that is, to identify who is poor and then to restrict transfers to those individuals. Greater transparency of the lists of eligible beneficiaries will be important to effective implementation of a proxy-means test-based scheme.

This would necessitate identifying and highlighting the concerns and priorities of socially excluded and targeted communities such as Dalits, tribals, religious and ethnic minorities, migrants, slum dwellers, commercial sex workers, fishermans/ fishing community, youth, LGBTs, women and girls. It also envisages at putting the last first to eradicate extreme poverty; to address the root causes of poverty, inequality and exclusion.

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*Was associated with the National Institute of Rural Development & Panchayati Raj, Hyderabad