Introduction
In a world grappling with job insecurity, automation, and deepening inequality, the idea of Universal Basic Income (UBI) has captured the imagination of economists, policymakers, and even tech billionaires. The central idea is simple: every citizen receives a fixed amount of money, regularly, with no strings attached.
But is this idealistic dream economically feasible, or an unaffordable utopia?
What Is Universal Basic Income?
UBI is defined by five key features:
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Universal: Given to all citizens, regardless of income or employment status.
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Unconditional: No work requirement or means test.
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Regular: Paid at predictable intervals (monthly or annually).
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Cash-based: Not in kind (e.g., food rations), but direct transfers.
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Individual: Not to households, but to each adult (or even child).
Why the Buzz Around UBI?
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Technology and AI are displacing millions of routine jobs.
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COVID-19 exposed the fragility of social safety nets.
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Welfare delivery systems are often leaky, corrupt, and exclusionary.
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Rising inequality is stalling consumption-led growth.
Economic Rationale for UBI
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Poverty Reduction
Direct cash transfers can lift people out of extreme poverty immediately without bureaucratic hurdles. -
Boosting Consumption
UBI injects liquidity into the hands of the poor, who are more likely to spend than save, thus stimulating demand. -
Administrative Simplicity
Replaces complex welfare programs with one simple cash transfer, reducing leakages and red tape. -
Empowerment and Dignity
Gives people choice and autonomy, especially women and marginalized groups, unlike targeted subsidies. -
Cushion Against Automation
Acts as a safety net in an AI-dominated job market where traditional employment is declining.
Global Experiments with UBI
| Country | Type of Pilot | Key Results |
|---|---|---|
| Finland | €560/month to unemployed individuals | Improved well-being, not job uptake |
| Kenya (GiveDirectly) | Unconditional cash in rural areas | Higher health, schooling, savings |
| Canada (Ontario) | UBI trial later cancelled | Early results showed reduced stress and better job-seeking |
| USA (Stockton, California) | $500/month for 2 years | Better mental health and full-time work engagement |
| Iran | Cash transfer replacing fuel subsidies | High initial support, later inflationary pressures |
The Indian Context
India’s welfare system includes PDS, MNREGA, Ujjwala Yojana, PM-KISAN, and others—complex and fragmented. UBI could replace many of these with a single direct benefit transfer (DBT).
Notable Studies:
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Economic Survey 2016–17: Proposed a “quasi-UBI” of ₹7,620 per year to 75% of population (fiscally neutral if subsidies are rationalized).
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SEWA UBI Pilot (Madhya Pradesh): 6,000 individuals received monthly UBI. Resulted in:
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Higher school attendance
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Better nutrition
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Greater female financial control
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Increased small business activity
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Arguments in Favor of UBI
✅ Reduces Bureaucratic Corruption
Eliminates middlemen in welfare delivery.
✅ Promotes Entrepreneurship
Basic security encourages risk-taking and small business formation.
✅ Mitigates Mental Stress
Financial stability reduces anxiety, improves health and productivity.
✅ Gender Inclusion
When paid to women, enhances their agency in household decision-making.
✅ Rural Revitalization
Boosts demand for local goods and services in rural economies.
Criticisms and Concerns
❌ Costly and Unsustainable
A full-scale UBI for India could cost 11–12% of GDP, even with moderate payouts.
❌ Disincentivizes Work?
Some fear people may stop working. However, most pilots show no drop in work effort.
❌ Inflation Risk
Free money may drive demand up without matching supply, leading to inflation.
❌ Better Alternatives?
Targeted welfare schemes may be more efficient and equitable, especially in resource-constrained economies.
❌ Political Challenges
Phasing out subsidies and convincing voters and bureaucrats is politically risky.
Can UBI Be Made Feasible?
Instead of a full UBI, many suggest:
🔹 Quasi-UBI: Only for bottom 50–75% of population
🔹 Negative Income Tax: Pay only those below a threshold
🔹 UBI for Women: Increase female labor force participation
🔹 Universal Child Allowance: For all children under 18
🔹 Replace Inefficient Subsidies: Food, fertilizer, electricity
Case Study: PM-KISAN as a Stepping Stone
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₹6,000/year to farmers with small landholdings
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Over 11 crore beneficiaries
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Delivered via Direct Benefit Transfer (DBT)
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While not universal, it lays infrastructure for UBI—bank accounts, Aadhaar, mobile connectivity (JAM Trinity)
Conclusion
UBI is not a silver bullet, but it’s a compelling idea in an era of inequality, automation, and pandemic-driven shocks. Whether India adopts full UBI or a modified basic income scheme, the conversation is crucial.
As a social contract, UBI represents trust in citizens over bureaucracy. As an economic policy, it calls for rethinking welfare in the 21st century.
Will the future have jobs for everyone? If not, UBI may be the fallback rope we all need.