QUE. Universal Basic Income (UBI) in India can serve as a foundation for social security by reducing the complexities of the welfare state. Critically examine.

Ans.

Universal Basic Income (UBI) is a social welfare concept under which all beneficiaries receive a regular guaranteed income in the form of unconditional transfer payments. It was highlighted by the then Chief Economic Adviser in the Economic Survey 2016–17.

• Opportunities/Potential Benefits of UBI:

• Social Security: It reduces poverty and income inequality by providing a minimum income to everyone, especially the most vulnerable and marginalized sections of society.

• Simplified Welfare System: The existing welfare system can be streamlined by replacing various targeted social assistance programmes. This reduces administrative costs and eliminates the complexities associated with means testing, eligibility requirements, and benefit delivery.

• Structural Economic Transformation: The implementation of UBI can help address the problem of disguised unemployment in the agricultural sector, thereby accelerating structural transformation in the Indian economy.

• Work and productivity can be redefined.

• Individual Freedom: UBI provides financial security to individuals and enables people to pursue entrepreneurship, take risks, and engage in creative or socially beneficial activities.

• Challenges Before UBI in India:

• Cost and Fiscal Sustainability: UBI is an expensive scheme, and its implementation would require the government to increase taxes, reduce expenditure, or borrow additional funds.

• For example, based on current population estimates, providing a UBI of only ₹1,000 per month to all adults would cost around 3–4.9% of GDP.

• Allocating a significant share of government expenditure to UBI may reduce investment in critical sectors such as healthcare, education, and infrastructure.

• It may reduce the incentive to work and lower people’s productivity and efficiency.

• Global Economic Competitiveness: The implementation of UBI may affect India’s global economic competitiveness, particularly in labour-intensive industries.

However, the benefits of UBI can be made more inclusive through its phased implementation beginning with pilot projects. Thus, adopting a balanced approach is essential for the successful implementation of UBI.