What the article is about:
- The article talks about the reasons why universal basic insurance is a better proposition than universal basic income.
Relevance
- GS3: Employment, government policies and intervention.
Analysis:
- The article discusses about need various types of security nets to any income shock, and why universal basic insurance is a better option.
- Three types of security nets:
- First is passive safety net which catches those who are living on line of basic living wages(1),and are about to fall to critical survival line(line 2).
- Second is active safety net which works like trampoline so that those who fall on it are able to bounce back to line 1.
- Third is proactive safety net which acts like a launchpad so that those who fall on it will not only bounce back but will also move beyond line 1.
Social security (Food, health and income security)in India:
- The NFSA is world’s largest food security program.
- For health there are plethora of schemes such as Ayushman bharat scheme, ESIC( employees state insurance corporation) and central government health scheme (CGHS).
- Income security is the trickiest part, there are three types of provident fund schemes available for organised sector i.e. General provident fund( GPF), Employee’s provident fund (EPF), and public provident fund(PPF).
- Income security schemes for unorganised sector are PM kisan maan dhan yojana, Atal pension scheme, PM shram yogu maandhan yojana, NPS- Traders, MNREGA.
Why universal basic insurance? :
- Despite the availability of these many health security schemes, 400 million Indians are not covered under any kind of health insurance and out of 500 million workers in India, about 100 million have no income security.
- Proponents of universal basic income cite the informality of Indian economy as the hurdle in rolling out schemes such as unemployment insurance.
- The universal basic insurance is a better option for two reasons:
- Insurance penetration(premium as a percentage of GDP) that stands at mere 4% in India.
- The data of informal sector are now available.
Conclusion:
- Due to huge fiscal implications (around 4.5% of GDP), the proposal of universal basic income runs the risk of implementation failure.
- Hence, Till the Indian economy grows to have adequate voluntary insurance, social security can be boosted through the schemes of universal basic insurance.
