Context

• Localized experiments with universal basic income have shown mostly positive outcomes across states, strengthening calls in favor of social policy.

Universal basic Income

• Universal basic income is the concept under which all citizens of a country receive a legally stipulated and equally set financial grant paid by the government.
• These include coverage potential, fairness in social contracts, power relations in labor markets, and gender equity, among others.

Potential advantages of UBI

• Poverty Alleviation: UBI has the potential to significantly reduce poverty by providing a basic income floor to all individuals, regardless of their employment status or income level. It ensures that everyone has access to a minimum level of economic security, meeting their basic needs for food, shelter, and healthcare.
• Reduced Inequality: UBI can help reduce income and wealth inequality by providing a more equal distribution of resources. It offers financial support to those who are economically disadvantaged, helping to bridge the wealth gap and create a more equitable society.
• Economic Stimulus: UBI can act as an economic stimulus by injecting money directly into the hands of individuals. This money is likely to be spent on essential goods and services, thereby increasing consumer demand and stimulating economic activity. This can have positive effects on local businesses and contribute to economic growth.
• Increased Entrepreneurship and Innovation: With a guaranteed basic income, individuals have a greater ability to take risks, pursue entrepreneurial ventures, or engage in creative pursuits. UBI provides a safety net that reduces the fear of failure and allows people to explore new ideas, or invest in their education or skills development. 
• Simplified Social Welfare Systems: UBI has the potential to streamline and simplify existing social welfare programs. By providing a universal cash transfer, it reduces bureaucracy and administrative costs associated with means-testing and monitoring eligibility for various social assistance programs.
• Adaptability to Changing Labor Markets: As automation and technological advancements continue to reshape the job market, UBI can provide a safety net for individuals whose livelihoods are disrupted by these changes. 

Disadvantages of UBI

• • Financial Feasibility: Implementing UBI on a large scale in a country as populous as India would require substantial financial resources. The cost of providing a basic income to every citizen could strain government budgets and potentially lead to increased taxes or reduced funding for other essential public services.
  • Inflationary Pressure: Introducing UBI without appropriate economic safeguards could lead to increased inflation. If everyone receives a basic income, there may be a surge in demand for goods and services, potentially driving up prices and reducing the purchasing power of the basic income itself.
  • Dependency and Work Incentives: If individuals receive a basic income regardless of their employment status, some may choose not to seek employment. This could have negative consequences for economic productivity and growth.

• Targeting and Equity Concerns: Implementing a universal cash transfer may not effectively target those who are most in need of support. Certain vulnerable groups, such as those living in extreme poverty or with specific needs, may require more targeted and tailored social welfare interventions.

• Regional Disparities: India has significant regional disparities in terms of income levels, cost of living, and access to resources. Providing a uniform basic income across the country may not adequately address these regional variations and could exacerbate existing inequalities.

State led initiatives

• In 2019, the Congress proposed Nyuntam Aay Yojana (minimum income scheme) that guaranteed Rs.6,000 per month for poor families and offered Rs. 72,000 annually for 20 per cent of the poorest families.
• In 2019, Odisha implemented its own cash support scheme—Krushak Assistance for Livelihood and Income Augmentation for farm families, landless farmers and agricultural laborers to reduce costs and invest in income generation activities.
• In 2023, Madhya Pradesh also implemented cash transfer schemes for women.

Conclusion

• Automation, unemployment, climate crises, pandemics, declining female labour force participation and growing inequality are among the crises that make people, especially the underserved and marginalized, more vulnerable. 
• UBI and better government services are perhaps the best way to provide control, benefits and freedom to the poorest and weakest sections.