Minimum Basic Income

Context:
Recently, there have been calls for introduction of Minimum BasicIncome (MBI) in the country.



What is it?
The Minimum Basic Income is a social welfare system that guaranteesa basic income to households, provided they meet certain conditions.This is different from Universal Basic Income (UBI) scheme, which is aperiodic, unconditional cash transfer to all citizens on individual basis,without means-test or work requirement. To that extent, the MinimumBasic Income is a conditional UBI or a quasi UBI (targeted).

Advantages:

  • Social Justice & Equity: There is a need for such ways to ensure ajust society that needs to provide every individual a minimumincome to provide for basic necessities.
  • Freedom of choice: The poor in India are treated as subjects of Government’s welfare policies, rather thaneconomic decision makers. MBI treats them as agents and entrusts them with the responsibility of usingwelfare spending as they see best.
  • Poverty alleviation: According to Economic Survey (2016-17), income transfers can reduce poverty to 0.5% ata cost of about 4% to 5% of the GDP, if those in the top 25% income bracket are not included. Moreover,minimum income guarantee also covers urban poor.
  • MBI has potential to reduce rural distress for e.g. it can decrease long term rural indebtedness, as propensityto save increases.
  • Better social development: Pilot studies in Madhya Pradesh have shown that the income supplements canimprove nutrient intake, school enrolment and attendance of female students, toilet building etc.
  • Financial Inclusion: By augmenting rural income & promoting usage of bank accounts, which further expandsbanking services.
  • Other advantages include administrative efficiency, gender equity (by taking individuals and not household asbeneficiaries), insurance against shocks and flexibility in labor market.



Location: Thiruvananthapuram, Kerala, India

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