Universal Basic Income: Arguments in Favour & Against
- India’s rapidly widening wealth gap, increasing automation-related job losses, and persistent inefficiencies in welfare delivery have collectively reignited the national debate on implementing a Universal Basic Income (UBI) as a contemporary social protection model.
About Universal Basic Income (UBI)
- UBI is a regular, unconditional cash transfer from the state to every citizen, providing a minimum income level regardless of work or social status.
- India currently implements various forms of “semi-UBI”:
- Cash transfer schemes for farmers and women.
- State-level cash transfers for the unemployed youth.
Arguments in Favour of UBI in India
- Economic Equity: India’s top 1% owns nearly 40% of the country’s wealth, while the top 10% controls nearly 77%; UBI can address this inequality through redistributive justice.
- Income Security: Pilot projects in Madhya Pradesh demonstrated that UBI enhanced nutrition, boosted school attendance, and increased earnings among poor households.
- Administrative Efficiency: Direct transfers via the JAM (Jan Dhan–Aadhaar–Mobile) trinity can minimise leakages, corruption, and overlap in existing welfare schemes.
- Empowerment Impact: The Economic Survey 2016–17 observed that UBI frees citizens from patronage systems, strengthening women’s financial independence and decision-making authority.
- Crisis Protection: UBI provides a reliable safety net for households facing health emergencies, job losses, or climate-related shocks.
- Technological Transition: As automation and AI replace traditional jobs, UBI can justly distribute productivity gains across society.
Key Issues in Implementing UBI in India
- Fiscal Feasibility: A UBI aligned with the poverty line would cost around 4.9% of GDP, exerting pressure on public finances and prompting subsidy reductions or increased taxes.
- Work Disincentive: A guaranteed income might reduce the willingness to take on low-wage jobs, potentially distorting rural and informal labour markets.
- Inflation Risk: Large-scale cash injections could raise prices in rural areas with limited supply, decreasing the real value of transfers.
- Targeting Ethics: Universal coverage risks diverting funds to the non-poor, undermining the policy’s efficiency and political support contentious.
- Delivery Barriers: Despite digital progress, limited banking access and Aadhaar-linked authentication failures in remote areas still cause exclusion errors.
- Welfare Disruption: The sudden removal of welfare programs, such as PDS or MGNREGA, could threaten current livelihood support systems.
Way Forward
- Phased Implementation: Implement a Modified and Phased Basic Income (MPBI) beginning with vulnerable groups—women, elderly, and disabled citizens.
- Digital Strengthening: Enhance JAM+ (Jan Dhan–Aadhaar–Mobile plus grievance redressal) systems to ensure transparent and error-free service delivery.
- Welfare Rationalisation: Streamline inefficient and overlapping welfare schemes while maintaining high-impact programmes like PDS and MGNREGA.
- Fiscal Sustainability: Expand the tax base, reform regressive subsidies, and gradually redirect non-merit subsidies towards funding UBI.
- Evidence-Based Rollout: Conduct various regional pilot projects using robust data analytics to assess impact, refine design, and ensure accountability.
Sabka Saath, Sabka Vikas, Sabka Vishwas underpins India’s move to UBI, ensuring phased reforms, fiscal prudence, and protection of welfare schemes for dignity and inclusion. “Economic justice is the foundation of democracy,” fostering equitable growth and social empowerment for all citizens.
Reference: The Hindu
PMF IAS Pathfinder for Mains – Question 434
Q. As fiscal pressures rise and welfare demands expand, should India transition from its subsidy-heavy welfare architecture to a Universal Basic Income (UBI) framework? Examine the potential gains, the associated risks, and the key governance reforms required for its effective implementation. (250 Words) (15 Marks)
Approach
- Introduction: Write a definition-based introduction to Universal Basic Income (UBI).
- Body: Examine the potential gains, also mention the associated risks, and the key governance reforms required for its effective implementation.
- Conclusion: Emphasis on a phased transition to UBI with practical implementation.
