As a form of social security UBI will help in reducing inequality and eliminating poverty. Thus it ensures security and dignity for all individuals. As human labour is being substituted by technology, there will be reduced wage income and reduced purchasing power. UBI will compensate for reduced purchasing power.
Advantages of UBI
- First, UBI would give individuals freedom to spend the money in a way they choose. In other words, UBI strengthens economic liberty at an individual level. This would help them to choose the kind of work they want to do, rather than forcing them to do unproductive work to meet their daily requirements.
- Universal Basic Income would be a sort of an insurance against unemployment and hence helps in reducing poverty. UBI will result in equitable distribution of wealth. As explained above, only poor will receive the full net benefits. Increased income will increase the bargaining power of individuals, as they will no longer be forced to accept any working conditions. UBI is easy to implement. Because of its universal character, there is no need to identify the beneficiaries.
- Thus it excludes errors in identifying the intended beneficiaries – which is a common problem in targeted welfare schemes. As every individual receive basic income, it promotes efficiency by reducing wastages in government transfers. This would also help in reducing corruption.
- Considerable gains could be achieved in terms of bureaucratic costs and time by replacing many of the social sector schemes with UBI. As economic survey points out, transferring basic income directly into bank accounts will increase the demand for financial services. This would help banks to invest in the expansion of their service network, which is very important for financial inclusion.
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