Relevance – GS Paper II (Social Justice & Welfare); GS Paper III (Indian Economy)
Source – Economic Survey 2016–17; The Hindu; NITI Aayog; LiveMint

Context

India’s growing economic inequality, job insecurity, and automation-led disruptions have reignited the debate on Universal Basic Income (UBI) — a bold welfare idea proposing a periodic, unconditional cash transfer to every citizen. Unlike targeted schemes, UBI aims to provide a basic income floor ensuring dignity, freedom, and resilience against poverty and unemployment.

Concept and Rationale

Universal Basic Income (UBI) is a social security mechanism where the State provides every citizen a fixed amount of money regularly — universal (for all), unconditional (no eligibility tests), and periodic (continuous payments).

In the Indian context, UBI has been proposed as a response to:

• Inefficiencies in welfare delivery – Current schemes face leakages, duplication, and exclusion errors.
  
• Job precarity – Automation, gig work, and informal employment have made livelihoods unstable.
  
• Persistent poverty and inequality – India’s wealthiest 10% own over 70% of national wealth, while the bottom half owns less than 3%.
  
• Administrative burden – Conditional, paper-based welfare systems exclude those lacking documentation or awareness.
  

The Economic Survey 2016–17 termed UBI “a powerful idea whose time has come” for ensuring a minimum economic security for every Indian.

The Case for UBI in India

1. Economic Empowerment – Direct cash enables citizens to make independent spending decisions, reducing dependency on intermediaries.
   
2. Gender and Social Equity – Direct payments to women can strengthen financial autonomy.
   
3. Efficiency and Transparency – Aadhaar-based Direct Benefit Transfer (DBT) systems already reach millions; UBI could leverage this digital framework.
   
4. Crisis Resilience – In times like the COVID-19 pandemic, a basic income can act as a stabiliser for consumption and demand.
   
5. Simplification of Welfare – A unified transfer system can replace multiple fragmented subsidies, improving fiscal management.
   

Feasibility – Can India Afford UBI?

Implementing UBI for all citizens would require substantial fiscal space.

However, universal coverage may not be immediately viable. A phased or quasi-universal model, starting with vulnerable groups — the elderly, disabled, or informal workers — is more realistic.

Major Challenges

1. Fiscal Burden – Large outlay could strain public finances, potentially crowding out health or education spending.
   
2. Risk of Replacing Targeted Welfare – UBI should complement, not replace, existing social protection schemes like MGNREGS or PM-KISAN.
   
3. Inflationary Pressure – Increased cash supply without corresponding output could raise prices, especially in rural markets.
   
4. Moral Hazard – Critics fear unconditional payments may discourage work participation; however, global pilots show mixed evidence.
   
5. Political Economy Issues – Implementation requires political consensus and administrative discipline to prevent misuse or populist distortions.
   

UBI represents a shift from welfare dependence to empowerment. It redefines the citizen–state relationship — from being a passive recipient to an autonomous decision-maker. Yet, India’s fiscal constraints and socio-economic diversity mean that a hybrid model — combining targeted transfers with universal guarantees — may be more practical.

Key Takeaways

• UBI is a periodic, unconditional cash transfer guaranteeing minimum income security.
  
• It addresses welfare inefficiencies, income inequality, and automation-induced displacement.
  
• Feasibility depends on fiscal space, subsidy rationalisation, and efficient DBT mechanisms.
  
• A targeted or phased UBI model could serve as a transitional step.
  
• The goal is not charity, but economic citizenship and social dignity.
  

One-Line Wrap:
Universal Basic Income is not just a welfare tool — it is a step toward ensuring dignity, inclusion, and economic freedom for every Indian.

UPSC Mains Question:
“Discuss the feasibility and implications of implementing Universal Basic Income in India. Can it replace the existing welfare model?”