Answer:

Universal Basic Income (UBI) refers to a fixed, unconditional income provided to all citizens regardless of their employment status or income. With automation and artificial intelligence disrupting traditional job sectors, UBI has gained attention as a potential solution to rising unemployment. Recently, countries like Finland and Canada have conducted UBI pilot projects, raising debates about its feasibility in India.

Challenges Posed by Automation and Artificial Intelligence to Employment

• Job Displacement in Manufacturing: Automation is transforming the manufacturing sector by replacing manual labour, leading to large-scale displacement of low-skilled workers, who struggle to find alternative employment in the evolving economy.
  For example: McKinsey estimates that automation could displace between 400 and 800 million jobs globally by 2030, significantly affecting India’s labour-intensive industries like textiles and automotive.
• Income Inequality: Automation and AI disproportionately benefit high-skilled workers while displacing low-skilled labour, exacerbating income inequality.     
• Impact on Informal Sector: India’s large informal sector, employing 83% of the workforce (IMF), is highly vulnerable to automation, where robotics and AI threaten to eliminate manual jobs, leaving workers without stable income sources.     
• Skill Mismatch: As industries increasingly adopt automation, demand for high-tech skills is rising, while traditional workers face displacement due to skill mismatches, requiring retraining and upskilling to stay relevant in the job market.    
• Job Instability in the Gig Economy: The gig economy, largely driven by AI-powered platforms, offers flexible but insecure employment, where workers face fluctuating incomes and lack of job benefits, amplifying economic uncertainty.
  For example: Gig workers on platforms like Uber and Zomato experience income instability due to varying demand and the absence of protections like health insurance and job security.
• Rural Job Losses: Automation in agriculture and other labour-intensive industries is disproportionately affecting rural areas, where mechanisation reduces the need for manual labour, causing widespread job losses and economic decline.     
• Social Unrest: Rising unemployment due to automation, especially among youth, can lead to widespread social unrest, as economic instability creates dissatisfaction and threatens the social fabric of affected communities.
  For example: The Yellow Vest protests in France were partially driven by economic insecurities linked to job losses from automation, signalling the potential for unrest in other regions.

Feasibility of Implementing a Universal Basic Income (UBI)

• High Fiscal Cost: Implementing UBI at a national level would place significant financial strain on government resources, as it requires a large percentage of the national budget, diverting funds from other crucial welfare programs.
  For example: The Economic Survey 2016-17 estimated that a modest UBI of ₹7,620 per person annually would cost 4.9% of our GDP, making it financially burdensome for the government.
• Impact on Existing Welfare Schemes: UBI could potentially consolidate or replace targeted welfare schemes like MGNREGA and PDS, raising concerns about how such changes may impact the most vulnerable who rely on these specific benefits.
  For example: The shift to Direct Benefit Transfers (DBT) for LPG subsidies caused disruptions in service delivery, prompting concerns that UBI could similarly affect essential services.
• Regional Disparities: A uniform UBI across India may not adequately address regional economic differences, as higher living costs in urban areas would require larger payments compared to underdeveloped rural regions.
  For example: Kerala’s higher cost of living may necessitate a greater UBI amount than states like Bihar, where the same allocation might be sufficient, making uniform implementation problematic.
• Political Resistance: The introduction of UBI could face significant opposition from political parties and interest groups, particularly if it involves reducing or eliminating popular welfare schemes that are seen as critical for electoral success.    
• Logistical and Administrative Challenges: Administering UBI to a vast and diverse population like India’s would present considerable logistical difficulties, including exclusion errors and inefficiencies in disbursement.
  For example: The Aadhaar-linked welfare schemes have experienced exclusion rates, with 0.8% of individuals being denied access to benefits due to Aadhaar-related issues, raising concerns for UBI implementation.

Implications of Implementing a UBI

Negative implications

• Inflation Risk: Increasing purchasing power through UBI without a corresponding rise in the production of goods and services may lead to inflation, reducing the purchasing power and effectiveness of the cash transfers.
  For example: Venezuela’s hyperinflation crisis, fueled by unchecked cash transfers, serves as a warning of the potential inflationary effects if UBI is not carefully implemented.
• Work Disincentives: UBI could discourage some people from seeking employment, particularly for low-paying or less attractive jobs, reducing workforce participation.
  For example: Critics of the UBI experiment in Ontario, Canada, raised concerns about whether unconditional payments would demotivate individuals from seeking full-time employment.
• Opposition from interest groups: UBI may face opposition from interest groups and political factions benefiting from existing welfare programs, as well as those who believe UBI is politically or economically unsustainable.     
• Increased Tax Burden: Financing UBI may require higher taxes, particularly on the wealthy and corporations, which could provoke significant opposition and potentially slow economic growth or investment.    

Positive implications

• Reduction in Poverty: UBI provides a consistent income, helping millions meet their basic needs and escape the poverty trap, leading to improved living standards and long-term social benefits.
  For example: The Madhya Pradesh UBI pilot saw improved health and educational outcomes, demonstrating UBI’s potential to reduce poverty in India.
• Social Safety Net for Informal Workers: UBI can offer financial security to informal workers, who often face unstable incomes and lack access to social safety nets, improving their economic stability and well-being.
  For example: Brazil’s Bolsa Família program, which provides direct cash transfers, has significantly improved living conditions for informal sector workers.
• Increase in Consumer Demand: UBI boosts purchasing power for lower-income individuals, increasing demand for goods and services, which stimulates economic activity and supports local businesses, especially in times of economic downturns.     
• Encouragement of Entrepreneurship: UBI reduces the financial risks associated with starting new businesses, allowing individuals to explore entrepreneurial opportunities without fear of economic failure, thus fostering innovation and job creation.     

Alternative Approaches to Addressing Income Inequality and Unemployment in the Indian Context

• Skill Development and Vocational Training: Building a skilled workforce by expanding vocational training in emerging sectors like AI, renewable energy, and advanced manufacturing is crucial for reducing unemployment and income inequality.
  For example: The Skill India Mission can focus on equipping rural youth with technical skills, fostering entrepreneurship, and filling skill gaps in industries.
• Public Sector Employment Expansion: Investment in public sector jobs, particularly in healthcare, education, and infrastructure, can provide employment opportunities and reduce inequality.
  For example: The National Infrastructure Pipeline (NIP) aims to create millions of jobs by investing ₹111 lakh crore by 2025 in infrastructure projects across India.
• Promotion of Small and Medium Enterprises (SMEs): Supporting SMEs through access to credit, tax incentives, and digital infrastructure can stimulate job creation and reduce regional income disparities.     
• Guaranteed Employment Schemes: Expanding employment guarantee schemes from rural to urban areas can address unemployment in cities by engaging people in public works and infrastructure projects.
  For instance: An Urban Employment Guarantee Scheme can provide work in areas like waste management, urban infrastructure, and green energy initiatives.
• Universal Social Security System: A comprehensive social security system, including health insurance and pensions for informal sector workers, can address income inequality and provide a safety net.     
• Promoting Green Jobs: Investing in green sectors such as renewable energy and sustainable agriculture can create jobs while promoting environmental sustainability and addressing unemployment.
  For instance: The International Solar Alliance can be utilised to promote solar energy projects, creating green jobs and contributing to India’s climate change goals.
• Formalization of the Informal Sector: Integrating informal workers into the formal economy through digitalisation and taxation reforms can improve wages, provide access to social benefits, and reduce inequality.
  For instance: Aadhaar-linked wages and GST reforms can help formalise small businesses and self-employed workers, integrating them into the formal economy.
• Focus on Women’s Workforce Participation: Increasing female workforce participation through flexible work options, childcare support, and skill development programs can help reduce gender-based income inequality.
  For instance: Expanding microcredit programs through Self Help Groups (SHGs) can empower women entrepreneurs, boosting economic participation and reducing income disparities.

As India navigates the challenges of automation and AI, UBI presents both opportunities and constraints. While it offers a safety net, fiscal challenges and socio-economic implications must be addressed. As Mahatma Gandhi said, “The true measure of a society is how it treats its weakest members.” A balanced approach combining UBI with alternative solutions may prove effective. 

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