11/01/2019 - Indian Economy

January 11, 2019
6 months

Sikkim could be the first Indian State to implement Universal Basic Income. If we apply the concept of UBI to India as a whole, will that bring economic and social prosperity to India? Critically analyze (200 Words )

Refer - Business Standard

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IAS Parliament 5 months


UBI is premised on the idea that a just society needs to guarantee to each individual a minimum income which they can count on, and which provides the necessary material foundation for a life with access to basic goods and a life of dignity.

UBI brings Economic and Social prosperity

·        It promotes liberty because it is anti-paternalistic, opens up the possibility of flexibility in labour markets. It promotes equality by reducing poverty. It promotes efficiency by reducing waste in government transfers.

·        The case for UBI has been enhanced because of the weakness of existing welfare schemes which are riddled with misallocation, leakages and exclusion of the poor. Eg: Funds still remain unutilized in Compensatory afforestation fund Management and planning authority.

·        UBI is not a substitute for state capacity rather it is a way of ensuring that state welfare transfers are more efficient so that the state can concentrate on other public goods.

·        UBI is an acknowledgement that society’s obligation to guarantee a minimum living standard is even more urgent in an era of uncertain employment generation in India.

·        A guaranteed income will reduce the pressures of finding a basic living on a daily basis.

·        Payment – transfers will encourage greater usage of bank accounts, leading to higher profits for banking correspondents (BC) and an endogenous improvement in financial inclusion. Credit – increased income will release the constraints on access to credit for those with low income levels.

Arguments against UBI

·        The levels at which universal basic income are likely to be pegged are going to be minimal guarantees at best; they are unlikely to crowd incentives to work.

·        They take away the yoke of necessity and they will be lazy. For high wages: that if wages rise beyond a certain level workers will choose leisure over work.

·        Households, especially male members, may spend this additional income on wasteful activities. Moral hazard (reduction in labour supply) A minimum guaranteed income might make people lazy and opt out of the labour market.

·        Gender disparity induced by cash, Gender norms may regulate the sharing of UBI within a household – men are likely to exercise control over spending of the UBI. This may not always be the case with other in-kind transfers.

·        Unlike food subsidies that are not subject to fluctuating market prices, a cash transfer’s purchasing power may severely be curtailed by market fluctuations.

·        Once introduced, it may become difficult for the Indian government to wind up a UBI in case of failure.

sachu sadanandan 6 months

plse verify

IAS Parliament 5 months

Try including the arguments against UBI. Keep Writing.

Pk 6 months


IAS Parliament 5 months

Good Answer. Keep Writing.

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