As rising inequality, job insecurity, and social distress erode economic stability, Universal Basic Income (UBI) has moved from a utopian ideal to a pragmatic policy tool for ensuring dignity, equity, and economic resilience.

About Universal Basic Income (UBI)

• Definition: A UBI is a periodic, unconditional cash transfer to every citizen, irrespective of income or employment status.
  • Unlike India’s existing welfare system, which is employment-based or poverty-targeted, UBI is a rights-based approach linked to citizenship.
• Objectives: A UBI restores consumer demand, rewards unpaid care work, and rebuilds the social contract weakened by pandemics and market-driven inequality.

Rationale For The Consideration Of UBI

• Severe Wealth Gap: According to the World Inequality Database, India’s wealth inequality Gini stood at 75 in 2023. 
  • The top 1% of the population owns 40% of the national wealth, while the top 10% controls nearly 77%. 
  • These figures suggest a level of concentration unseen since colonial times.
• Job Insecurity: Automation, artificial intelligence, and the gig economy are creating precarious employment. 
  • McKinsey predicts 800 million global job losses by 2030, with semi-skilled Indian workers highly vulnerable. 
  • Gig economy jobs often lack security or pensions.
  • India’s GDP growth — 8.4% in 2023-24 — has failed to translate into broad-based prosperity
• Societal Stress: Climate change, forced migration, and rising mental health issues are increasing societal stress. 
  • India ranks 126 out of 137 countries in the World Happiness Report- behind Nepal, Bangladesh, and Pakistan.

Arguments Supporting UBI Implementation

• Administrative Ease: Modern technology (Jan Dhan accounts, Aadhaar, Direct Benefit Transfer) allows UBI to be implemented with minimal leakages.
• Economic Uplift: Pilot projects in Madhya Pradesh showed recipients invested money in education and nutrition without reducing work. 
  • International examples from Finland and Kenya confirm improved food security, mental health, and societal outcomes.
• Buffer for Skill Development: UBI provides financial security, allowing workers displaced by automation to acquire new skills.
• Political Transformation: UBI shifts the citizen–state relationship from transactional “freebies” towards rights-based citizenship, encouraging people to vote for systemic improvements like better schools, hospitals, and governance.

Challenges in the Implementation of UBI

• Concern of Inflation: Inflation is a concern of UBI Implementation. However, inflation doesn’t automatically occur with higher money supply; as seen in post–World War II Germany, when adequate production of goods and services kept prices stable despite increased income.
• Funding: Implementing UBI at the current poverty line would cost around 5% of India’s GDP, which presents a funding challenge.
• Implementation and Reach: Mobile and banking access challenges exist in remote and tribal areas, making effective distribution difficult.
• Universal Coverage Debate: Providing UBI to extremely wealthy individuals may be unnecessary initially, raising questions about prioritisation and scope.

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Way Forward

• Focus on Funding Strategy: Finance the scheme through moderate tax hikes and rationalisation of existing subsidies to ensure fiscal sustainability.
• Pilot-Based Implementation: Launch targeted pilots for vulnerable groups—women, tribals, and the elderly—before expanding UBI to universal coverage.

Conclusion

A well-designed UBI can redefine India’s social contract by ensuring economic security, dignity, and inclusion for all citizens. Its success, however, hinges on fiscal prudence, targeted pilots, and robust institutional readiness before universal rollout.

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