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Mahesh

25/08/22 10:30 AM IST

UNIVERSAL BASIC ‘INSURANCE’

In News 
  • As the importance of social security came into focus after the major waves of the COVID-19 pandemic, the debate on universal basic income (UBI) began to resurface in policy circles across the globe.
Why UBI? 
  • The insurance penetration (premium as a percentage of GDP) in India has been hovering around 4% for many years compared to 17%, 9% and 6% in Taiwan, Japan and China, respectively.
  • Thus insurance can become a need-based safety net for the poor.
  • The economy largely remains informal, data of that informal sector are now available both for businesses (through GSTIN, or Goods and Services Tax Identification Number) and for unorganised workers (through e-Shram, which is the centralised database of all unorganised workers).
  • The social registry portal, ‘Kutumba’, developed by Karnataka is a good example of social security data.
Types of Security Nets 
  • The first type of safety net is basically a social assistance programme meant for the most income-deprived sections of society.
  • The second is an active safety net which works like a trampoline so that those who fall on it are able to bounce back to ‘Basic Living Wages’. The second type of safety net is a scheme with a higher outlay.
  • The third is a proactive safety net which acts like a launchpad so that those who fall on it will not only bounce back but will also move up beyond ‘Basic Living Wages’.
  • The third type of social security net is the most desirable option but requires immense resources and institutional capacity.
Concerns 
  • Lack of political will
  • Huge fiscal pressure
  • Free cash to people may increase the inflation rate
  • Difficulty in reducing subsidies on exiting schemes
  • No guarantee that cash will be spent on productive assets.
Source- The Hindu 

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