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Sikkim-Universal basic income

Sikkim-Universal basic income

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  • GS 3 || Economy || Structure of the Indian Economy || Poverty

Why in news?

  • Sikkim’s ruling party, the Sikkim Democratic Front (SDF), recently declared to include the Universal Basic Income scheme in its manifesto ahead of the Assembly election in 2019 and aims to implement it by 2022. If everything goes according to the plan, it will be the first state to implement UBI in India.

What is Universal Basic Income?

  • Universal Basic Income (UBI) is a programme for providing all citizens of a country or other geographic area/state with a given sum of money, regardless of their income, resources or employment status.
  • The main idea behind UBI is to prevent or reduce poverty and increase equality among citizens. The essential principle behind Universal basic income is the idea that all citizens are entitled to a livable income, irrespective of the circumstances they’re born in.

But why do we need UBI ?

  • Too many government schemes are hard to manage
  • One basic income could help everyone
  • UBI would require subsumption of other subsidies and allowances in order to free up resources.
  • Subsuming other schemes is an essential prerequisite, given the sheer number of schemes and programmes run by governments in India.
  • The Budget for FY18 showed there were about 950 central sector and centrally sponsored sub-schemes in the country.
  • These, in fact, accounted for about 5% of GDP by Budget allocation, and top 11 schemes accounted for about 50%.
  • The food subsidy or Public Distribution System (PDS) is the largest programme, followed by the urea subsidy and the MGNREGS.
  • If the states are included, the number of schemes would be even larger.

Won’t people become lazy with UBI?

  • A pilot project by the Self Employed Women’s Association (SEWA) and the United Nation’s Children’s Fund (UNICEF) was implemented in Madhya Pradesh from June 2011 to November 2012, where unconditional cash transfers (UCT) were provided to the people.
  • Citing the study, the Economic Survey 2016-17 claimed that “people become more productive when they get a basic income”.

The sikkim UBI experiment could help the entire country

  • Sikkim is the least populated state in India, has its per capita GDP growing in double digits since 2004-05.
  • Sikkim also decreased its poverty ratio by 22% to 51,000 (8.2%) in 2011-12 from 1.7 lakh (30.9%) in 2004-05.
  • Sikkim also became the first fully organic state.
  • Sikkim’s literacy rate increased to 82.2% from 68.8% in 2001, among the country’s highest.
  • Whether the basic income will work in a country of over 120 crore, and how is a matter for bigger discussions, but with Sikkim taking the charge, it adds another feather to the cap of the state which is ahead in several other areas- its literacy rate is 98 percent, and the state assembly, in December last year, approved the ‘one family, one job’ scheme to create over 16,000 jobs. The BPL percentage has come down from 41.43% in 1994 to 8.19% in 2011-12.

What are the concerns in India?

  • Even if two-thirds of India’s 30 crore-odd households were to be given Rs 1,000 monthly UBI, it would annually cost around Rs 2.4 lakh crore.
  • There could be savings through rationalisation of subsidies and scrapping of wasteful and ineffective welfare schemes.
  • However, these measures are challenging when it comes to implementation, especially in terms of price rationalisation.

Additional information – Sikkim has set up examples in the country in different areas in the past also, some of them being:

  • Sikkim is the best state for women in the workplace, thanks to its high rates of female workforce participation, there’s less crime against women.
  • Sikkim’s literacy rate increased to 82.2% from 68.8% in 2001, among the country’s highest.
  • Sikkim is the least populated state in India, has its per capita GDP growing in double digits since 2004-05.
  • Sikkim also decreased its poverty ratio by 22% to 51,000 (8.2%) in 2011-12 from 1.7 lakh (30.9%) in 2004-05.
  • Sikkim also became the first fully organic state.