Hindu Editorial Analysis : 30-August-2023

Jan Dhan 2.0, an extension of the Pradhan Mantri Jan Dhan Yojana (PMJDY), opens up an opportunity to envision a robust social safety net in the form of Universal Basic Income (UBI). UBI is a groundbreaking concept that can transform the lives of millions by providing a guaranteed income without conditions or means tests. In this essay, we will explore the concept of UBI, its significance, and how PMJDY can play a pivotal role in its implementation.

Universal Basic Income (UBI): A Brief Overview

Universal Basic Income (UBI) is a revolutionary economic policy that entails providing an unconditional income to all citizens, regardless of their income or employment status. This concept is built on three fundamental principles:

  1. Universality: UBI aims to reach every citizen, ensuring that no one is left behind.
  2. Unconditionality: There are no strings attached to UBI. It’s a direct cash transfer without imposing any behavioral requirements.
  3. Agency: UBI empowers individuals to take control of their lives and reduces dependence on government welfare programs.
Significance of UBI

The implementation of UBI carries several crucial benefits:

  1. Dignified Life: UBI guarantees a minimum income for a dignified life with access to basic necessities, lifting people out of poverty.
  2. Economic Stability: During economic downturns, UBI payments can stabilize the economy by increasing aggregate demand.
  3. Poverty Reduction: UBI is a potent tool for reducing poverty, promoting social justice, and narrowing income disparities.
  4. Boosting Purchasing Power: By putting money in the hands of the poor, UBI enhances their purchasing power, benefiting local businesses and the overall economy.
  5. Simplicity: UBI is easy to implement as it doesn’t require identifying beneficiaries, reducing administrative inefficiencies.
  6. Reduced Government Waste: The straightforward implementation of UBI minimizes wastage of government funds.
PMJDY and Universal Basic Income/Cash Transfer

PMJDY, initially launched as a financial inclusion program, can play a pivotal role in implementing UBI:

  1. Streamlined Approach: Instead of numerous welfare programs, a simple unconditional cash transfer to every adult can be facilitated through PMJDY.
  2. JAM Integration: PMJDY aligns with the JAM (Jan Dhan Yojana, Aadhaar cards, Mobile money platforms) policy, consolidating subsidies into lump-sum cash transfers to households.
Features of Universal Cash Transfer

A universal cash transfer system under PMJDY has distinct advantages:

  • Universal Reach: It doesn’t target only the poor, eliminating issues associated with means-testing.
  • Cash Transfer: Avoiding in-kind transfers and subsidies simplifies the process, reducing market interference.
  • Unconditional: Recipients don’t need to conform to specific norms, eliminating the complexities of monitoring behavior.
Benefits for PMJDY

Leveraging PMJDY for UBI can have multiple advantages:

  • Financial Inclusion: Individuals’ savings accounts would see immediate growth.
  • Reduced Bureaucracy: Streamlined cash transfers reduce administrative costs and complexity.
Challenges & Objections

Despite its potential, UBI faces certain challenges and objections:

  1. Moral Hazard: Critics argue that providing income without work may discourage labor force participation.
  2. Affordability: Implementing UBI for all, including the well-off, poses fiscal challenges, demanding substantial budget allocation.
Why In News

Jan Dhan 2.0 has the potential to pave the way for a visionary social safety net, transforming it into a robust system that includes a universal basic income (UBI) to provide financial security for all citizens. With the implementation of this innovative approach, we can ensure that no one is left behind in times of economic uncertainty and hardship.

MCQs about PMJDY and the UBI Vision

  1. Which of the following is NOT a principle of UBI ?
    A. Universality
    B. Conditionality
    C. Unconditionality
    D. Agency
    Correct Answer: B. Conditionality
    Explanation: The UBI is unconditional, meaning there are no behavioral requirements or conditions imposed on recipients.
  2. What potential benefits does the essay attribute to the implementation of UBI?
    A. Increased government waste
    B. Economic instability during recessions
    C. Poverty reduction and enhanced purchasing power
    D. Complex identification of beneficiaries
    Correct Answer: C. Poverty reduction and enhanced purchasing power
    Explanation: The UBI can reduce poverty and boost the purchasing power of individuals.
  3. How does PMJDY align with the concept of UBI?
    A. By targeting only the well-off
    B. By requiring strict means-testing
    C. By facilitating streamlined cash transfers
    D. By promoting in-kind transfers
    Correct Answer: C. By facilitating streamlined cash transfers
    Explanation: The PMJDY can play a role in implementing UBI by simplifying cash transfers to every adult, aligning with the principles of UBI.

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