Universal Basic Income (UBI) for India

Published On: 2024-09-13

With rising concerns over jobless growth, stagnant wages, and increased inequality due to automation and technological advancements, the concept of Universal Basic Income (UBI) has gained attention globally. UBI is seen as a potential tool to provide a safety net for those left behind by these economic changes. Various countries have already adopted or are considering UBI to address the decline in employment opportunities and labor productivity.

The Need for UBI in India

India faces significant unemployment challenges, with 83% of the unemployed population without access to basic income. UBI could potentially provide a stable income source, supporting vulnerable sections of society who are not part of the formal employment system. However, the UBI concept is broad, and it can take multiple forms, from universal payments to targeted cash transfer schemes, like those already implemented for farmers and unemployed workers in India. This raises the question of whether a fully universal UBI is necessary or whether a more targeted approach would be sufficient.

Challenges of UBI Implementation

The main challenge in implementing UBI is the financial strain it would place on the government. India's fiscal constraints mean that allocating a significant portion of GDP to UBI would require trade-offs in other areas of public spending, such as infrastructure development and welfare programs. Additionally, providing financial support without generating employment may not effectively solve long-term economic problems. It could lead to social and political divides, as those who work may perceive it as unfair to subsidize those who do not. Therefore, generating productive employment is seen as a priority to avoid the possible negative consequences of UBI.

Employment vs UBI

To tackle unemployment, there is a growing emphasis on job creation in sectors such as agriculture, construction, and small-scale industries. Recent trends suggest that automation and digital technologies are replacing jobs, particularly in labor-intensive sectors. The solution may not lie in UBI alone but in fostering employment opportunities that can absorb the growing workforce. Policy interventions should focus on improving skills, enhancing infrastructure, and supporting industries that provide large-scale employment.

Concerns about Jobless Growth

India is witnessing uneven growth, with sectors like manufacturing and IT expanding, while job creation has not kept pace. Despite industrial growth, automation has reduced the number of available jobs. Investments in these areas need to be balanced with initiatives that promote employment, particularly in sectors like agriculture and rural development, where a large portion of the population is employed.

Social Safety Nets and Policy Recommendations

The discussion surrounding UBI also touches on the need for improved social safety nets, which are currently inadequate and unevenly distributed across states. A robust welfare system could bridge the gap between job losses due to automation and the need for financial support, but the long-term solution still lies in creating jobs. UBI can be part of this solution, but it must be carefully designed to complement employment-generating policies.