UBI is a regular, unconditional cash transfer paid universally to all citizens or residents, regardless of employment or income status, delivered as cash on a periodic basis.

Arguments in Favour of UBI in India

• Superior to Fragmented Welfare Schemes:
  UBI offers a simple, transparent direct cash transfer that eliminates exclusion errors and corruption prevalent in over 950 existing schemes. It reduces leakage and administrative costs compared to in-kind transfers like the Public Distribution System (PDS). The 2016-17 Economic Survey estimated food and fuel subsidies cost about 3% of GDP. Leveraging the JAM (Jan Dhan-Aadhaar-Mobile) trinity, UBI provides a digitally verifiable, efficient social dividend.
• Insurance Against Economic Shocks:
  UBI acts as an automatic stabilizer during crises like the COVID-19 pandemic or climate disasters, avoiding administrative delays and political bias in ad hoc relief. NITI Aayog highlighted informal sector workers (90% of workforce) were worst hit during COVID-19, underlining UBI’s role in economic security.
• Enhanced Gender Equity:
  Direct cash transfers to individuals, especially women, boost their financial autonomy and household bargaining power. It recognizes unpaid care work, which women disproportionately perform (299 min/day vs 97 min for men, NSS data). The SEWA-UNICEF pilot showed cash empowers women to invest in enterprises and economic decisions.
• Stimulus for Entrepreneurship:
  UBI provides a stable income floor that encourages risk-taking, asset investment, skill development, and innovation by freeing people from subsistence struggles.
• Investment in Human Capital:
  Cash enables families to invest in health, nutrition, and education. The Madhya Pradesh pilot showed increased family spending on these and improved child nutrition (weight-for-age rose from 39% to 59%).
• Mitigating Job Loss from Automation:
  UBI can compensate for job displacement in sectors vulnerable to automation and expanding gig economy workers (projected 23.5 million by 2029-30). It delinks income from employment, managing "jobless growth."

Arguments Against UBI in India

• Fiscal Unsustainability:
  A poverty-line UBI would cost around 4.9% of GDP (2016 prices), a huge fiscal burden given India’s combined debt over 81% of GDP. It could crowd out essential public investments in health, education, and infrastructure.
• Disincentive to Work:
  UBI might reduce labor participation, especially in informal sectors that employ over 90% of workers, leading to labor shortages and wage distortions. Evidence from US Negative Income Tax experiments showed reduced work hours, particularly among secondary earners.
• Risk of Inflation:
  Injecting large cash amounts without matching supply increase risks demand-pull inflation, hitting prices of essentials like food and housing and lowering UBI’s real value. CPI was already elevated at 5.49% in Sept 2024.
• Equity Concerns:
  Universal payments to all, including wealthy groups holding 77% of national wealth, result in inefficient use of scarce resources. Equal transfers to the rich and poor are regressive in an unequal country.
• Undermining Targeted Welfare:
  UBI replacing schemes like PDS or MGNREGA risks harming vulnerable groups dependent on food security and statutory employment rights. These schemes stabilize wages and are vital safety nets.
• Implementation and Exclusion Challenges:
  Despite JAM infrastructure, digital illiteracy, banking gaps, and authentication failures (up to 51%) pose significant last-mile delivery challenges and could exclude needy populations.
• Concerns on Spending:
  Critics worry unconditional cash might be spent on harmful "temptation goods" like alcohol or tobacco, especially if not provided to women directly, which could worsen public health and economic costs.

Steps to Make UBI Viable in India

• Incremental Welfare Floor (MPBI):
  Start with a Modified and Phased Basic Income at 1-1.5% of GDP, providing a universal minimum safety net without displacing key schemes like PDS and MGNREGA initially. This controls fiscal impact while minimizing exclusion.
• Quasi-Universal Targeting:
  Prioritize vulnerable demographics such as women, elderly (60+), and persons with disabilities — a “universal within a category” approach to maximize social benefits and limit costs.
• Transparent Subsidy Rationalization Fund:
  Create a legally ring-fenced UBI fund financed by phasing out inefficient subsidies (e.g., high-income fuel, certain tax exemptions), ensuring dedicated budget support protected from diversion.
• Conditional, Gradual Replacement of Schemes:
  Replace only those welfare programs with documented inefficiencies via rigorous social audits, preserving impactful ones like PDS and MGNREGA until UBI reaches viability at poverty-level amounts.
• Strengthen JAM+ Infrastructure:
  Expand digital literacy and banking services, introduce robust grievance redressal for biometric failures, and provide fallback mechanisms like OTP/manual withdrawals to ensure inclusivity.
• Fiscal Federalism Cooperation:
  Establish a Joint UBI Commission for cost-sharing between Centre and States (e.g., 60:40), integrating state schemes without harming state finances or creating political conflict.
• Legal Entitlement for UBI:
  Embed UBI in law as a social right through a Social Security Act, guaranteeing permanence, political commitment, and enforceability by citizens to ensure adequacy and regularity.

Universal Basic Income (UBI) carries the transformative promise of reshaping India’s social contract—anchoring it in dignity, security, and opportunity for all. Its success, however, hinges on thoughtful fiscal architecture, seamless digital delivery, and a phased, inclusive rollout. Rather than replacing existing welfare guarantees, a well-designed UBI can strengthen and complement them, creating a more cohesive safety net. If implemented with vision and care, UBI could become a defining step toward a more just, resilient, and equitable India. As the nation navigates the twin challenges of rapid growth and deepening inequality, UBI reminds us that true progress lies not in the accumulation of wealth, but in the universal assurance of dignity.