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India is entering a phase where rapid economic growth coexists with deepening inequality, labour precarity, and technological disruption. Automation, the expansion of the gig economy, climate-related displacement, and rising mental health stress are reshaping livelihoods faster than policy can adapt. In this context, Universal Basic Income (UBI)-once dismissed as utopian-has re-emerged as a serious policy option to modernise India’s welfare architecture.

What is Universal Basic Income?

A Universal Basic Income is a periodic, unconditional cash transfer to all citizens, irrespective of income, employment status, or social category. Its defining features are universality, unconditionality, and direct transfer, ideally delivered through Aadhaar-linked Direct Benefit Transfer (DBT). Unlike targeted welfare schemes, UBI treats income security as a citizenship right, not as charity or conditional assistance.

Why India Needs to Revisit UBI

India’s welfare state is extensive but fragmented, with hundreds of schemes plagued by leakages, duplication, and exclusion errors. While digital infrastructure has improved delivery, complexity remains high. A UBI offers a simple income floor, reducing administrative burdens and bypassing stigma attached to poverty-targeted benefits.

The economic rationale is compelling. Despite high GDP growth, inequality has reached historic levels. According to the World Inequality Database (2023), India’s wealth Gini is around 75, with the top 1% owning about 40% of national wealth. Growth has not translated into well-being, reflected in India’s low ranking in the World Happiness Report (2023). Nobel laureate Joseph Stiglitz has long cautioned that GDP alone fails to capture quality of life, equity, and sustainability.

At the same time, automation adds urgency. Estimates from the McKinsey Global Institute suggest large-scale job displacement globally by 2030, with India’s informal and semi-skilled workforce particularly vulnerable. A UBI can act as a transition buffer, sustaining consumption and allowing time for reskilling.

Evidence from Pilots

Empirical evidence strengthens the case. India’s SEWA-led Madhya Pradesh pilot (2011–13) showed improvements in nutrition, school attendance, and small enterprise activity. International experiments in Finland, Kenya, and Iran reported better food security, mental well-being, and resilience, without reducing willingness to work or triggering runaway inflation.

Beyond Economics: Reworking the Citizen-State Relationship

A UBI has a normative value. It shifts welfare from paternalistic, scheme-based patronage to a rights-based social contract. By reducing dependence on ad hoc freebies, it can temper populist politics and empower citizens to demand better governance outcomes-schools, healthcare, rule of law, and environmental stewardship-rather than transactional giveaways.

UBI also recognisesunpaid care work, largely performed by women, which remains invisible in conventional economic metrics. By providing unconditional income security, it expands agency rather than fostering dependency.

Challenges and the Way Forward

Legitimate concerns remain. A modest UBI equivalent to the poverty line could cost around 5% of GDP, raising questions of fiscal sustainability. Universality may dilute redistributive impact, and digital divides could exclude the most vulnerable. Inflation risks also need careful management through supply-side readiness.

A phased and calibrated approach offers a pragmatic path: begin with vulnerable groups (women, elderly, informal workers), integrate UBI withrather than abruptly replaceschemes like PDS and MGNREGA, and finance it through progressive taxation and rationalisation of inefficient subsidies. Strengthening the JAM trinity and grievance redressal is essential.

Conclusion

UBI is not a panacea. It will not automatically create jobs or fix public services. But as a foundational income floor, it can reduce insecurity, mitigate inequality, and restore dignity in an era of uncertainty. The real question facing India is no longer whether it can afford a UBI, but whether it can afford the democratic and social costs of mass economic insecurity without one.