Why This
With the fear of jobless growth, the talk about Universal Basic Income (UBI) has hit the public discourse hard. But let’s be real—it’s not that simple to handle this topic. Learning the challenges in implementing UBI and the opportunities it presents are the basics which everybody should know. But whats important is to analyse UBI across economic, political, social, and administrative angles. This article dives deep into each of these aspects and further breaks down whether UBI can truly work as a safety net, giving you the full picture to tackle any question thrown your way!
GS 1
Indian Society: Poverty and Social Change
Note4Students: Analyze the role of UBI in mitigating poverty, unemployment, and income inequality in the context of automation and globalization.
Microtheme: Poverty and Developmental issues.
GS 2
Governance, Polity, Social Justice: Welfare Schemes and Vulnerable Sections
Note4Students: Examine UBI as a complement or alternative to welfare schemes, and its role in addressing poverty, education, and social equity.
Microtheme: Welfare and Development Schemes
GS 3
Economic Development, Technology, Environment: Inclusive Growth and Employment
Note4Students: Critically assess UBI’s potential to reduce income inequality, address automation-driven unemployment, and its fiscal implications.
Microtheme: Inclusive Growth X Public Expenditure
GS 4
Ethics, Integrity & Aptitude: Social Justice and Governance
Note4Students: Reflect on the ethical aspects of UBI, emphasizing fairness, transparency, and its role in ensuring social justice for marginalized communities.
Microtheme: Quality of Service Delivery
Is UBI a safety net for the Future ?
The International Labour Organization (ILO) reports that 83% of the unemployed population in India are youth, largely due to the impact of automation and artificial intelligence (AI) on traditional jobs. This transformation of the economy has worsened income inequality, with a 1.6% global drop in labor income share between 2004 and 2024. For a developing nation like India, where a large portion of the workforce is unskilled or semi-skilled, such trends are deeply troubling.
Additionally, inflationary pressures and geopolitical tensions have prompted aggressive monetary policies, which have only strained the labor market further. Rising unemployment rates in 2024, as projected by the ILO, highlight these structural issues within global and national labor markets.Given this context, Universal Basic Income (UBI) emerges as a potential solution to address the growing inequality and economic instability. In a nation like India, where income disparity is high, and the formal employment sector remains limited, UBI can play a transformative role by promoting economic stability, ensuring social equity, and empowering the marginalized. But like every other measure it has two sides to it. This article analyses the Pros and Cons of it.
What is UBI ?
Universal Basic Income (UBI) is a social welfare proposal in which all beneficiaries regularly receive a guaranteed income in the form of an unconditional transfer payment.
A brief dissection of various aspects:
| Category | Pros | Cons |
| Economic | 1. Stimulus: UBI boosts local economies by increasing consumer spending and supporting small businesses. Ex: Economic Survey 2016-17 predicted UBI could shrink poverty from 22% to 0.5%. 2. Entrepreneurial Growth: With financial security, individuals are more likely to take entrepreneurial risks. Ex: SEWA’s UBI pilot (2011-12) showed increased health, productivity, and financial stability. 3. Increased Demand: UBI encourages spending, boosting demand for goods and services and spurring economic growth. | 1. High Cost: UBI is expensive and may require significant tax hikes or spending cuts. Ex: UBI could cost 4.9% of GDP vs. 3.7% for current welfare programs (Economic Survey 2016-17). 2. Inflation Risk: Increased disposable income may lead to inflation if not managed properly. 3. Financial Feasibility: UBI could lead to cuts in essential welfare programs, impacting vulnerable groups. Ex: Replacing welfare programs like MGNREGS may destabilize rural safety nets. |
| Political | 1. Popularity: UBI can gain political traction by appealing to voters as a tangible solution to poverty. Ex: Alaska’s Permanent Fund Dividend boosted political engagement. 2. Electoral Advantage: Political parties advocating UBI could attract a larger voter base, especially from marginalized communities. Ex: 2017 Economic Survey showed growing support for UBI as a policy. 3. Political Stability: UBI can promote social cohesion by reducing economic disparities, easing tensions in divided societies. | 1. Inequity: UBI’s universal nature may disproportionately benefit the wealthy if not carefully designed. Ex: IMF report suggested UBI could worsen income inequality if welfare is replaced. 2. Universality vs. Targeting: There is ongoing debate about whether UBI should be truly universal or targeted to those most in need. 3. Rollback of Welfare: Politically challenging to phase out existing welfare schemes to fund UBI. Ex: Transitioning from PDS and MGNREGS to UBI raises concerns about food security. |
| Social | 1. Poverty Reduction: UBI directly reduces poverty by providing a guaranteed income floor for all citizens. Ex: SEWA’s UBI pilot improved health and economic outcomes for low-income households. 2. Empowering Women: UBI can promote gender equality by providing women with financial independence. Ex: 2018 data showed 75% of adult Indian women weren’t in formal employment; UBI could alleviate dependency. 3. Health Benefits: UBI can reduce stress and improve mental health by reducing financial insecurity. Ex: Telangana’s “Rythu Bandhu” scheme linked to improved well-being of farmers. | 1. Dependency Risk: UBI may reduce the incentive to work, creating a reliance on government support. Ex: Critics argue that UBI could disincentivize job-seeking or skill development. 2. Productivity Decline: Critics fear that UBI may foster laziness or entitlement. 3. Administrative Issues: Complexities in reaching every citizen, especially in remote or rural areas. Ex: Implementing UBI in a country with varied socio-economic conditions like India faces challenges with eligibility. |
| Administrative | 1. Simplified Welfare: UBI streamlines welfare by replacing multiple schemes, reducing administrative costs. Ex: Economic Survey 2016-17 highlighted UBI’s potential to reduce bureaucratic overhead. 2. Income Security: Provides a reliable safety net without the need for eligibility assessments. Ex: PAHAL (LPG subsidy) is a successful income support model. 3. Efficient Resource Allocation: UBI can free up government resources for other critical sectors like healthcare and education. | 1. Beneficiary Identification: Implementing UBI in India is challenging due to difficulties in accurately identifying beneficiaries. Ex: World Bank report noted India’s socio-economic diversity complicates UBI implementation. 2. Legal and Political Challenges: Overhauling existing welfare programs and integrating UBI may face resistance from vested interests. 3. Budget Constraints: UBI’s cost (estimated at 4.9% of GDP) could crowd out spending on crucial services like education and infrastructure. Ex: Economic Survey 2016-17 raised concerns about the affordability of UBI for India. |
CONCEPT : SOCIAL PROTECTION SYSTEMS IN INDIA
Social protection systems refer to comprehensive programs and policies designed to protect individuals and households from economic and social risks, vulnerabilities, and shocks. These systems aim to promote economic stability, reduce poverty, and ensure access to essential services. Any social protection system, thus, essentially addresses one or more of the 6 Vulnerabilities.
ADDRESSING THE 6 Vs = 6 VULNERABILITIES
- Economic Vulnerability: Addressing poverty and income inequality through programs like MGNREGA, PM-KISAN, and DBT.
- Health Vulnerability: Managing health risks and catastrophic expenses with schemes like Ayushman Bharat.
- Food Insecurity: Ensuring access to basic nutrition through programs like the Public Distribution System (PDS) and Mid-Day Meal Scheme.
- Vulnerability of Marginalized Groups: Supporting the elderly, disabled, and marginalized communities through pensions and social assistance (NSAP).
- Employment Vulnerability: Tackling job insecurity with schemes like MGNREGA and NRLM.
- Financial Vulnerability: Promoting financial inclusion and security via banking access (PMJDY) and Direct Benefit Transfers (DBT).
Social protection systems in India are crucial for addressing the multifaceted challenges faced by vulnerable populations. By providing financial stability, healthcare access, food security, and employment support, these systems play a vital role in promoting social equity, reducing poverty, and building resilience against economic and health shocks.
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