unacademy 31st January 2019 Important Editorial Discussion(Think Universal Basic Capital) Presented By: Prabhakar Jha
Economists seem to be offering three solutions to the economy's structural problems: Three Pointers for India's Economy India's GDP is growing quite wel That there is no problem India needs to do much better to improve overall human development More privatisation. Benefits of India's economic growth must trickle down much faster A UBI to be provided by the state.
Background to a UBl in India Indian economy is doing quite well. It is providing enough jobs, they say. And, statistically, poverty has reduced a lot. improve education and health care, and to address the persistent informality and small scale of enterprises more privatisation of public services (as U.S. President Ronald . However the private sector is structurally not designed to provide . Milton Friedman (an American economist who received the 1976 Reagan said, government is not the solution, it is the problem). affordable public services equitably. Nobel Memorial Prize in Economic Sciences), said, the business of business must be only business. Businesses must be run with a profit motive. They cannot take on the burden of subsidising citizens who cannot pay for their services.
Disruption in the Economy and Universal Basic Income Why UBI The beauty of a 'universal' basic income, its proponents say, is that it avoids messy political questions about who deserves assistance. Structural forces It also side-steps the challenge of actually providing the services required: education health, food, etc 'Industry 4.0 An economic consequence of declining growth of wage incomes Just give the people cash: let them buy what they need
Will UBI Work . Even if a UBI is given, 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 serve them. . This will not solve the basic human development problems that must be solved. Some economists who were proponents of UBI have even begun to dilute their simplistic concept of UBI to make it financially and politically feasible. They propose a QUBRI (quasi-universal basic rural income), targeted only at poorer people in the rural areas. Their scheme is no longer universal. . 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, and entitlement and measurement issues will have to be addressed for these schemes too. . All the schemes, rural and urban, could be cash transfer schemes, which Aadhar and the digitisation of financial services will facilitate. .However, this still begs the question about how to provide good quality public services for people to buy.
A Simple UBI will Not Work . 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.
GS And GA faculty @ Mahendra's Coaching Institute. Teaching Polity, and international relations for 7 years