Temporary Basic Income
PROTECTING POOR AND VULNERABLE PEOPLE IN DEVELOPING COUNTRIES
Introduction: Temporary Basic Income as a policy measure during crisis
Following the rapid surge in Covid-19 cases across developing countries and the devastating socio-
economic crisis that follows because of the lost jobs and income suggest that the policy measures are
needed.
In many of the developing countries, the social protection systems are weak and mostly tend to benefit the
formal workers, leaving informal poor workers and their families unprotected.
The given paper focuses on Temporary Basic Income as a policy measure in these times of distress.
The rationales behind the estimates in this study offer a benchmark in terms of size and cost for providing
unconditional, non-entitlement based cash assistance during a specific period in the developing world.
Lack of Resilience to shocks for people in Developing Countries
Developing countries are less equipped and less resilient to shocks and for most of them, seven out of ten workers
in these countries are employed in the informal sector.
With the ongoing COVID-19 situation, a sizable share of population in developing share of population in
developing countries cannot be regarded as economically secure.
With the lack of safety nets, the sudden drop in people’s incomes hits particularly hard during crisis and often
persists with a low recovery beyond the end of crises.
Other than the monetary impacts, the progression of pandemic has exacerbated wide gender inequalities as it has
increased the burden of care on working mothers, while hitting harder the sectors with more female employment.
Thus, the non-pharmaceutical efforts to contain the disease, magnified by pre-existing structures of inequalities
and exclusion carry devastating costs for livelihood of less advantaged.
Temporary Basic Income for Poor and Vulnerable People
Temporary Basic Income refers to the shock resistant transfers that are not universal but targeted to people with
livelihoods below a vulnerability to poverty threshold.
There is strong evidence for developing countries that, in the presence of unconditional cash transfers, human capital
accumulation can be protected and boosted through expenditure on more and better diets, as well as on health and
education services.
The idea of a temporary basic income arises from the urgency to deliver shock-resistant transfers to an
unprecedented crisis. Several countries have taken a step forward in this direction by rolling out similar schemes
under different names and with diverse targeting thresholds.
The economic costs imposed by the pandemic are hard not only for the existing poor, but also to those who were at
high risk of falling into poverty before the pandemic and who are likely experiencing a limited income-generating
capacity.
Scenarios of temporary basic income for poor and vulnerable
1 2 3
A cash transfer equivalent to each
country’s average shortfall in income in
relation to the corresponding
A cash transfer equivalent to half the
vulnerability threshold defined above, viz. A uniform cash transfer of $5.50 a
median household per capita income or
$3.20 a day for countries in South Asia day.
consumption in each country.
and SSA, $5.50 a day for countries in
EAP and MENA, and $13 a day for
countries in ECA and LAC.
Cost of Temporary Basic Income to the nations
The given paper takes a conservative stance and assumes that pre-crisis welfare levels
by taking 2018 as the initial benchmark for the potential cost of the cash transfers.
Considering the size of the global economy, there is only a moderate cost to carry out a
comprehensive assistance transfer over a period of 3 to 9 months assuming a profound
shock with a slow recovery — that is, at least the average duration of 3 months of new
social protection measures currently in place.
Major Implementation Challenges
• Administrative and Digital Challenge: The administrative and
Administrative and Digital digital constraint makes it tough for the operating government to
Challenge
reach out to the people in need.
• Fiscal Space and Funding: Given the temporary nature of the
existing challenge, there occur fiscal issues that concern the
Fiscal Space and Funding
Challenge freeing up revenue from fiscal income earned normally in the
economy.
• Political Challenge: The political challenges stand up for the
scenario to consider how will the current situation affect the
Political Challenge
future conditions in politics.
Mitigating the Crisis
This paper focuses on estimating potential sizes of income transfers to 1.07 billion poor and 1.71
billion vulnerable populations in developing countries based on the vulnerability threshold in those
countries.
It also sheds light on the implementation challenges, including how to expand coverage and
combine digital and cash payments systems to reach excluded populations, how to fund a TBI
without raising new taxes, and how to begin to address the complex political economy challenges
posed by implementing a temporary basic income floor.
As per the policymakers, the idea behind the temporary basic income arises from an unprecedented
set of responses to an unprecedented crisis.
Thus, the paper suggests that a temporary basic income strategy is within reach and can inform a
larger conversation about how to address vulnerabilities worldwide through policy action.
