Correct Answer - Option 3 : 1 and 3 only
The correct answer is 1 and 3 only.
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Universal Basic Income (UBI) is a program for providing all citizens of a country with a given sum of money, regardless of their income, resources, or employment status.
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Objectives
- to prevent or reduce poverty
- to increase equality among citizens
- Its evolution can be traced back to the Western Developed World because of the threat of automation-induced job losses.
- Features
- Payments at periodic regular intervals
- Payments in cash
- Payments to individuals,
- Universality
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Reasons behind the Scheme in Indian Context
- Today, the average Indian family’s monthly income is roughly Rs 50,000, a 2,000 times increase since 1938.
- The poorest 10% of Indian families earn a mere Rs 5,000 a month. 25 million Indian families earn just a tenth of what the average Indian family earns.
- And, 50 million households earn just a fifth of the average Indian family.
- The Economic Survey 2016-17 suggested replacing all current cash transfers with universal basic income and not supplement the social welfare schemes.
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JAM (Jan Dhan, Aadhar, and Mobile) must be prerequisites for a successful UBI.
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Advantages:
- Fights Poverty and vulnerability
- New social contract
- Better targeting of poor
- Fighting technological unemployment
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Supporting unpaid care workers
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Expanding the middle class (Hence, Statement 2 is incorrect as it's an advantage, not a disadvantage.)
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Insurance against shocks
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Psychological benefits
- Disadvantages
- Conspicuous spending (It can trigger inflation) (Hence, Statement 1 is correct.)
- Disincentive to work
- Gender disparity
- Poor fiscal capacity
- Distort labor Market (Fall in labor force participation rate) (Hence, Statement 3 is correct.)
- The political economy of universality
- Exposure to market risks