Jan Dhan 2.0: Consider a universal basic income

livemint.com:

₹500 for three months announced for each of the 200 million odd Jan Dhan accounts held by women back then. As a mechanism, however, its most heroic role may be yet to come. For it enables us to envision a social safety net in the form of a universal basic income (UBI).

As a policy concept, a UBI is redistribution at its most literal; it puts everyone on the state’s payroll. The proposal is simple: Apart from fulfilling its usual duties of governance and paying for the security, healthcare and education of people, the state should deploy public funds to grant every adult a certain sum of money for personal use every month. The usual objection to this ‘money for nothing’ is the moral hazard it could pose.

If cash handouts start showing up in bank accounts, would it not make recipients too lazy to work? The answer depends on the actual size of these monthly transfers. With popular aspirations on an incline, transfers that allow no more than bare subsistence are very unlikely to distort labour-market incentives. What helps the hard-up meet primary needs will aid rather than disturb an economy driven by fast swelling demand for goods and services.

The next major question, for us especially, is whether the government can afford to run such a programme. Although maximum coverage is the conceptual aim of a UBI, its beneficiary list need not strictly be ‘universal’. The well-off would certainly have to be kept out.