UPSC RELEVANCE-GS Paper tag ( GS Paper 2 – Governance, Welfare Schemes)
Why in News
The idea of introducing a Universal Basic Income (UBI) in India has gained renewed attention. Growing inequality, rising job losses due to automation, and inefficiencies in welfare delivery have led to calls for redesigning India’s welfare architecture with UBI at its core.
Background
What is Universal Basic Income (UBI)?
UBI is a fixed, unconditional amount of money that the government gives regularly to every citizen, regardless of their income, wealth, or job status.
Main Features:
- Universal: Covers all citizens without discrimination.
- Unconditional: No work or eligibility criteria are required.
- Direct Transfer: Paid through Aadhaar-linked bank accounts under DBT (Direct Benefit Transfer).
- Rights-based: Recognizes income security as a basic right, not charity.
- Simplified System: Reduces multiple overlapping welfare schemes.
Need for UBI in India
What is Universal Basic Income (UBI)?
UBI is a fixed, unconditional amount of money that the government gives regularly to every citizen, regardless of their income, wealth, or job status.
Main Features:
- Universal: Covers all citizens without discrimination.
- Unconditional: No work or eligibility criteria are required.
- Direct Transfer: Paid through Aadhaar-linked bank accounts under DBT (Direct Benefit Transfer).
- Rights-based: Recognizes income security as a basic right, not charity.
- Simplified System: Reduces multiple overlapping welfare schemes.
Need for UBI in India
Growing Inequality:
● The top 10% of Indians hold nearly 77% of national wealth (WID Report 2023).
● Economic growth has not translated into equitable prosperity.
- Jobless Growth and Automation:
● Despite 8.4% GDP growth (2023–24), unemployment remains high.
● Automation could replace up to 69% of existing jobs (McKinsey Report). - Complex Welfare System:
● Over 400 welfare schemes lead to duplication and leakages (NITI Aayog, 2022).
● UBI could bring administrative efficiency by replacing overlapping programmes. - Social Well-being:
● India ranks 126th out of 137 countries in the World Happiness Report 2023.
● Economic growth has not improved life satisfaction or social security. - Recognition of Care Work:
● Women’s unpaid work contributes nearly 13% to India’s GDP (ILO).
● UBI can recognize and support such invisible contributions.
Global Experiences Supporting UBI
● India (Madhya Pradesh Pilot, 2011–13): Improved nutrition (↑25%), school attendance (↑12%), and small businesses (↑17%).
● Finland (2017–19): Better mental well-being and stable employment among participants.
● Kenya (GiveDirectly): 40% improvement in food security and local business growth.
● Iran (2011): Cash transfers replaced subsidies and reduced poverty without major inflation.
Challenges in Implementing UBI
- Fiscal Burden:A UBI of ₹7,620 per person per year would cost around 5% of India’s GDP, straining public finances.
- Targeting Dilemma:
● Universal inclusion could lead to waste if rich and poor receive the same benefit.
● A phased rollout or “quasi-universal” model may be more feasible. - Inflation Risk:Higher disposable income may push up demand and cause inflation if supply does not increase.
- Digital Divide:Poor internet connectivity, lack of bank accounts, and digital illiteracy could exclude rural and tribal populations.
- Political Resistance:
● Ending or merging existing subsidies and welfare schemes may face opposition.
● Strong political and administrative will is required for reform.
Way Forward - Start Gradually:
Begin with vulnerable groups such as women, elderly, and informal workers before expanding nationwide. - Integrate, Don’t Replace:
Continue essential schemes like PDS and MGNREGA alongside UBI during the transition. - Progressive Financing:
● Impose wealth, inheritance, and carbon taxes on the rich.
● Reduce inefficient subsidies to create fiscal space for UBI. - Strengthen JAM Infrastructure:
Improve the Jan Dhan–Aadhaar–Mobile (JAM) system for real-time transfer, grievance redressal, and inclusion. - Independent Oversight:
Set up a Social Security Commission to monitor rollout, fiscal health, and transparency.
Conclusion
A Universal Basic Income can become the foundation of a modern welfare state — one that ensures dignity, equality, and financial security for all. In a time of automation, job uncertainty, and inequality, UBI offers a new way to guarantee that every citizen has a safety net.
The real question for India today is not “Can we afford UBI?” — but rather “Can we afford the growing cost of insecurity and inequality without it?”
Mains Practice Question
Q. “Universal Basic Income (UBI) has the potential to simplify India’s complex welfare architecture while ensuring economic security for all.”Critically examine this statement in the context of India’s social protection framework. (Answer in 250 words)