Benefits of India’s economic growth must trickle down much faster to people at the bottom of the pyramid: to poorer farmers, landless rural labour, and hundreds of millions of workers living on the edge in low-paying, ‘flexible’ forms of employment with no social security.
Economists seem to be offering three solutions to the economy’s structural problems. One, that there is no problem. Two, more privatisation. And, three, a universal basic income (UBI) to be provided by the state.
Arguments in favour of UBI –
- The beauty of a ‘universal’ basic income, its proponents say, is that it avoids messy political questions about who deserves assistance.
- It also side-steps the challenge of actually providing the services required: education, health, food, etc. Just give the people cash: let them buy what they need.
if the cash will not provide citizens with good quality and affordable education and health, because neither the government nor the private sector is able or willing to, this will not solve the basic human development problems that must be solved.
A middle path –
Some economists have proposed a QUBRI (quasi-universal basic rural income), targeted only at poorer people in the rural areas. As the scheme is no longer universal, the features include –
- First, it will exclude the not-so-poor in rural areas as morally it should. Political questions about who should be included will have to be addressed.
- Second, it will not cover the masses of urban poor working for low and uncertain wages. Therefore, some other schemes will have to be drawn up for the urban sector,
What should be the solution?
- A simplistic UBI will not solve the fundamental problems of the economy. An unavoidable solution to fix India’s fundamental problems is the strengthening of institutions of the state to deliver the services the state must (public safety, justice, and basic education and health), which should be available to all citizens regardless of their ability to pay for them.
- The institutions of the state must be strengthened also to regulate delivery of services by the private sector and ensure fair competition in the market.
- The building of state institutions, to deliver and to regulate, will require stronger management, administrative, and political capabilities, not better economists.
How to achieve it?
- A better solution to structural inequality than UBI is universal basic capital, or UBC, which has begun to pop up in international policy circles.
- In this alternative approach, people own the wealth they generate as shareholders of their collective enterprises. Amul, SEWA, Grameen, and others have shown a way.
- Some economists go further and also propose a ‘dividend’ for all citizens, by providing them a share of initial public offerings on the stock market, especially from companies that use ‘public assets’, such as publicly funded research, or environmental resources.
To conclude, three better solutions to create more equitable growth than the ones on offer are: one, focus on building state capacity beginning with implementation of the recommendations of the Second Administrative Reforms Commission. Two, strengthen the missing middle-level institutions for aggregation of tiny enterprises and representation of workers. Three, the creativity of economists could be better applied to developing ideas for UBC than UBI.
Source – The Hindu