[Answered] If inequality is to be addressed, we need to rethink redistribution. In this context, highlight the need and feasibility of a universal basic income (UBI) as an elementary safety net for India’s all needy citizens.

Introduction: contextual introduction.
Body: Write in brief about the need of UBI and write some points about the feasibility of UBI.
Conclusion: Give a way forward.

Universal basic income (UBI) is a form of social security in which all citizens or residents of a country regularly receive an unconditional sum of money from a government in addition to any income received from elsewhere. Unconditional cash transfers are considered one of the fairest, most cost-effective, and most impactful ways to alleviate poverty and stimulate economic growth.


  • India spends about 2% of its GDP on core social protection and welfare schemes. This translates into an investment of Rs. 9 lakh crores in more than 10,000 schemes. Still coverage of schemes is not universal.
  • Since human labor is being increasingly substituted by technology, the wage income is being reduced drastically and as a result, the purchasing power is reduced. Thus, UBI will compensate for the reduced wage income.
  • The current labor market is terribly un-free because it relies on coercion, workfare, sanctions, draconian anti-labor legislation etc. The introduction of UBI would create a much freer labor market.

Feasibility of UBI:

  • Financially unviable: Adopting a universal approach in India would result in higher government expenditure as it will have to ensure that no citizens are excluded.
  • Fiscal burden: Due to the large size of the population, the government may experience high fiscal burden. Furthermore, once introduced, it may become difficult for the government to wind up a UBI in case of failure.
  • Limited financial inclusion: Nearly a third of adults in India still do not have a bank account. Hence, implementation of UBI will be a challenge and it may put too much stress on the banking system.
  • Utilization of money: There is no guarantee that the given cash will be spent on productive activities, health & education, etc. It may be spent on tobacco, alcohol, drugs, other luxury goods, etc.

UBI is not necessarily a silver bullet or a cure-all to end inequality. A transparent and safe financial architecture that is accessible to all is important for the success of the UBI. In other words, the success of UBI depends on the success of efficient mode of delivery like JAM Trinity.

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