Fighting COVID-19: EBI for India – NOW!

There is enough evidence for Universal Basic Income. Just make this happen.
<br>Krishanu Chakraborty

Krishanu Chakraborty

Krishanu Chakraborty works with a global advisory, data analytics, and research organization. Read his latest research here. Please see select writings from Krishanu here, here, and here. Follow him on twitter @krishanu_c.

All views here are personal

“The ideal is that society, as a first priority, should look out for its people’s survival; the lesson is that possibly it can do so without unequal redistributive plans.”

 – The New Yorker Magazine

This is an unprecedented crisis that humanity is facing – probably one of the most grave in the post World War II world. COVID-19 is ravaging through the world – respecting no barriers, borders, class, creed, economic status (and in India’s case, caste too). As I write this, the total number of cases stands at >665,000 and growing at an alarming rate.

After numerous delays in acting against the COVID-19, most countries have stepped up and are moving into complete or partial lockdown. For India, the scale of lockdown is countrywide – with additional conditions imposed by the individual states. Lockdowns are definitely one of the most important tools in our fight against COVID-19 – but fighting the virus comes at a heart-wrenching (but unavoidable) social and economic cost. The economic costs are true for every country but for countries like India – where the informal economy is dominant, along with widespread poverty – the costs are much higher. For daily migrant laborers and others dependent on the informal economy (with minimal or no social security), income sources have dried up.

The Central Government of India has announced a slew of measures to fight the economic costs. A significant part of the economic measure is through ensuring food security, and some direct cash transfers. But what the stimulus package missed – and what was needed most – a permanent move to enable Universal Basic Income (UBI, henceforth) for the most vulnerable Indian populace. What India got, instead, is a limited-time targetted income support for a subset of the vulnerable population.

The concept of UBI is not new at all. Richard Nixon toyed with this idea in 1969, but this never went through – thanks to politics. A Universal Basic Income is a government guarantee that each citizen receives a minimum income to cover the cost of living – no strings attached. This may sound egregious to some – but there is a growing evidence body to support UBI. Various completed pilots and controlled experiments have found meaningful impacts on improvements in education outcomes, crime rates, physical health, and mental health. Even in India, very encouraging positive effects were noticed from a UBI pilot in Madhya Pradesh.

But does a crisis like COVID-19 call for a UBI? Yes! Let’s quickly understand the UBI discussion in India –

Unfortunately, there has been limited support – politically – for UBI in India and this never got traction as an election issue. The arguments against UBI have focussed on the fiscal costs, mostly. However, there are innovative models (also here) that have been proposed by researchers for India – which shows that UBI will actually make the Indian welfare state more pro-poor. This is India’s chance to roll out a sustained basic income through its near-universal bank account coverage and pioneering payments system – and show the world how it is done.

In a crisis like COVID-19, the following immediate threats are real to the most vulnerable in India:

  1. Almost sure loss of income, as small and medium businesses falter and stop paying their employees and casual workers.
  2. So the minimal savings dry up instantly, with no foreseeable income in the future. Further, there is for sure a recession looming which means an extended period of loss of income.
  3. People cope with the shock to income by suddenly making efforts for reverse migration, as the cost of living in rural hinterlands is lower. But this significantly increases the risk of COVID-19 spread during the lockdown.

The only way to persuade people to stay put is a UBI, right now. A guaranteed income would have been able to assuage the fears and uncertainty that is associated with loss of income. For example, if an income guarantee was already in place – additional economic measures could have been targeted towards reducing the supply shock and controlling price gouging – because cost of living would have been taken care of. UBI would have definitely stopped people dying from hunger and reverse migration efforts – and reduce future uncertainty around the impending recession.

Let’s get this done, please. Else the economic costs of COVID-19 would be monstrous.

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