It took the COVID-19 pandemic to expose the precariousness of human society across the world. As the importance of social security came into focus after the major waves of the pandemic, the debate on universal basic income (UBI) began to resurface in policy circles across the globe. However, there is another UBI that needs to be examined in the Indian context, i.e., universal basic insurance. Before discussing the second UBI, or insurance, it is worthwhile looking at the design options for social security.
Types of security nets
Income shocks result in a free fall of those living on the line of basic living wages (say line 1) down towards the critical survival line (say line 2). In any case, a fall that is further below line 2 needs to be prevented as it can be catastrophic — a household can end up facing a poverty trap. Social security systems are like a safety net placed at line 2. These social security nets can be of three types. The first is a passive safety net which catches those falling from line 1 and prevents a fall below line 2. 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 line 1. 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 line 1.
