(General Studies I, II, III – Social Empowerment – Poverty and Developmental Issues, Welfare schemes for vulnerable sections of the population, Inclusive growth and issues arising from it, Employment)
- Universal Basic Income (UBI) refers to a financial support system where the government provides regular cash payments to all citizens, regardless of employment status.
- UBI has gained traction due to rising concerns about jobless growth, income inequality, and technological disruptions such as automation and artificial intelligence (AI) highlighted in the International Labour Organization’s (ILO) World Employment and Social Outlook.
- ILO says, 83% of the unemployed population are youth in India.
- The job opportunities, particularly in sectors such as manufacturing could not take off in India like China.
Universal Basic Income Experiments in India –
- India has several welfare schemes for farmers, women, and unemployed youth. However, they are targeted rather than universal. E.g. PM-Kisan Samman, Indira Gandhi National Old Age Pension Scheme.
- Self-Employed Women’s Association (SEWA) ran trials in Madhya Pradesh, providing unconditional cash transfers to families living below the poverty line.
- In 2022, the WorkFREE pilot project in Telangana further explored UBI’s impact, providing monthly cash support to families.
Necessity of Universal Basic Income –
- Addressing Demand Deficit: Lack of employment results in reduced incomes and demand in the market. UBI can help create demand in the economy, especially in times of unemployment-induced demand contraction.
- Job Displacement Due to Automation: With rising automation, sectors such as banking and e-commerce are employing fewer people despite expanding operations. UBI can support those displaced by technological advancements. Self-employment and gig economy jobs, which have grown due to lack of formal employment, often come with precarious income. A UBI could provide financial stability.
- Income Inequality: The income gap between workers and owners of capital has widened. UBI can help bridge income inequality by providing a base income to those left behind by rapid economic growth and technological changes.
- Poverty Alleviation: UBI is anticipated to significantly reduce poverty levels by providing a stable income floor for all citizens. The Economic Survey of 2016-17 estimated that a UBI could lift a substantial portion of the population out of poverty, thereby enhancing overall economic stability and growth

Pitfalls of UBI –
- Dignity of Work: Simply providing money without work compromises individual dignity. Employment opportunities, rather than unconditional cash transfers, are essential for sustaining societal balance. Providing jobs through programs such as MGNREGA or infrastructure projects offers both income and dignity, which UBI alone cannot provide.
- Social and Political Implications: UBI could lead to a social divide, with those who receive income without working potentially being stigmatized as “good for nothing”. This might create tensions between different socio-economic groups.
- Economic Feasibility: India is not ready for a full-fledged UBI. Universalizing basic social safety nets like healthcare and education would be a more practical approach. Implementing UBI on a large scale would require substantial financial resources, which could strain public finances if not backed by higher direct tax revenue.
- Inflationary Pressures: UBI could contribute to inflationary pressures. If everyone receives a fixed amount of money, it may drive up prices for goods and services as businesses adjust their pricing strategies to capture the additional income available in the market.
Challenges to Employment Creation • Capital-Intensive Growth: While capital investments in sectors like infrastructure and power have increased, they are not labour-intensive. The use of advanced machinery in construction and manufacturing has reduced the scope for direct job creation. More attention needs to be given to labour-intensive sectors such as education, healthcare, and rural development. E.g. IMF’s Advancing India’s Structural Transformation and Catch-up to the Technology Frontier, says India needs to create 143-324 million jobs by 2050 to enable its workers to shift towards more dynamic sectors. • Skill Mismatch: There is a mismatch between the skills demanded by new industries and those possessed by workers. Investment in education and skill development is crucial for future job creation. According to the Economic Survey 2023-24, only 51.25% of the country’s graduate youth is deemed employable. |
The debate around UBI in India reflects the complexity of addressing unemployment, automation, and income inequality. While UBI can provide financial security, it should not replace efforts to create jobs and provide social security through employment-based programs. The focus should be on a balanced approach under SDG 8 to “achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities” by 2030 along with social safety nets, and fiscal reforms to ensure inclusive growth and sustainable development.