India faces rising inequality, job losses from automation, and social insecurity. Universal Basic Income (UBI) has gained renewed attention as a pragmatic solution. It promises unconditional cash transfers to all citizens. This could simplify welfare, reduce poverty, and strengthen citizenship rights.
Context and Urgency
India’s wealth gap is at historic highs. The top 1% owns 40% of national wealth. GDP growth of 8.4% in 2023-24 has not improved broad prosperity. Social stress and job insecurity rise. Automation threatens millions of jobs by 2030. A UBI can cushion these shocks by providing a basic income floor.
What Is Universal Basic Income?
UBI is a fixed, regular cash payment to every citizen. It is unconditional and does not depend on income or employment. Unlike targeted welfare, it avoids complex eligibility and stigma. It supports unpaid care work and informal labour. UBI is a rights-based social protection model anchored in citizenship.
Advantages Over Current Welfare Systems
India’s welfare schemes are fragmented and inefficient. Leakages and exclusion are common. UBI could streamline delivery using digital platforms like Aadhaar and Direct Benefit Transfer. It reduces administrative costs and corruption risks. It ensures no one is left out due to paperwork or bureaucracy.
Economic and Social Impact
Pilot projects in India and abroad show UBI improves nutrition, education, and mental health. It does not reduce work incentives. UBI can boost consumer demand by giving low-income groups spending power. This may reduce extreme inequality and promote inclusive growth.
Challenges and Funding
A minimal UBI would cost about 5% of India’s GDP. Funding options include tax reforms, subsidy rationalisation, or borrowing. Universal payments to the wealthy may dilute redistributive goals. A phased rollout prioritising vulnerable groups can mitigate risks. UBI should complement existing schemes like the Public Distribution System.
Technology and Inclusion
Digital infrastructure is key for UBI success. Aadhaar and Jan Dhan accounts have expanded financial inclusion. Yet, gaps remain in remote and tribal areas. Closing these gaps is vital to avoid exclusion. Digital literacy and mobile connectivity must improve.
Changing Citizen-State Relations
UBI redefines the social contract. It shifts welfare from conditional handouts to a right of citizenship. This reduces political populism based on freebies. Citizens gain autonomy and dignity. It encourages demand for better governance and public services.
Future Prospects
UBI is not a cure-all but a foundation for economic security. It recognises invisible labour and supports social resilience. India’s welfare system is poised for transformation. The debate is no longer about affordability but democratic necessity.
Questions for UPSC:
- Taking example of Universal Basic Income (UBI), discuss how technology can transform social welfare delivery in India and the challenges involved.
- Examine the impact of automation and artificial intelligence on the Indian labour market and analyse policy measures to mitigate job displacement.
- Discuss in the light of rising economic inequality in India, how redistributive policies can be designed to ensure inclusive growth and social justice.
- Critically discuss the role of digital infrastructure like Aadhaar and Jan Dhan in promoting financial inclusion and reducing poverty in India.
Answer Hints:
1. Taking example of Universal Basic Income (UBI), discuss how technology can transform social welfare delivery in India and the challenges involved.
- Technology enables direct benefit transfers (DBT) via platforms like Aadhaar and Jan Dhan, reducing leakages and corruption.
- Digital infrastructure simplifies welfare delivery by eliminating complex eligibility verification and paperwork.
- UBI’s unconditional, universal cash transfers are feasible due to improved digital identity and banking penetration.
- Challenges include digital illiteracy, lack of mobile/internet access, especially in remote and tribal areas.
- Data privacy, cybersecurity risks, and exclusion due to technological gaps remain major concerns.
- Bridging connectivity and literacy gaps is essential to ensure truly inclusive welfare delivery through technology.
2. Examine the impact of automation and artificial intelligence on the Indian labour market and analyse policy measures to mitigate job displacement.
- Automation threatens up to 800 million jobs globally by 2030; India’s informal and semi-skilled sectors are highly vulnerable.
- Job displacement increases precarity, income insecurity, and social stress among workers lacking formal protections.
- Policy responses include Universal Basic Income as a buffer to provide income security during transitions.
- Upskilling and reskilling programs are critical to reposition displaced workers in evolving labour markets.
- Strengthening social security nets and promoting job creation in sectors less prone to automation are vital.
- Inclusive growth strategies must integrate technology adaptation with social protection to mitigate adverse effects.
3. Discuss in the light of rising economic inequality in India, how redistributive policies can be designed to ensure inclusive growth and social justice.
- India’s wealth inequality is extreme; top 1% owns 40% of wealth, necessitating robust redistributive measures.
- Universal Basic Income offers a simple, unconditional cash transfer to reduce poverty and provide income floor.
- Progressive taxation and subsidy rationalisation can fund redistributive policies without harming growth.
- Targeted support to vulnerable groups (women, elderly, disabled) ensures equity while phasing universal schemes.
- Complementing UBI with existing welfare (PDS, MGNREGA) preserves social justice and addresses multidimensional poverty.
- Redistributive policies must balance universality with fiscal sustainability and political feasibility.
4. Critically discuss the role of digital infrastructure like Aadhaar and Jan Dhan in promoting financial inclusion and reducing poverty in India.
- Aadhaar provides unique identity enabling direct benefit transfers and reducing fraud in welfare delivery.
- Jan Dhan accounts have expanded banking access to millions, facilitating cash transfers and financial services.
- Digital platforms lower administrative costs and improve transparency in subsidy and welfare schemes.
- However, gaps remain in digital literacy, mobile access, and banking connectivity in remote and tribal areas.
- Privacy concerns and exclusion risks arise due to biometric failures or lack of access to technology.
- Bridging infrastructure and literacy gaps is essential to maximize the poverty-reduction potential of digital inclusion.
