Home   »   Universal Basic Income   »   Universal Basic Income

Universal Basic Income: Definition, Advantages and Disadvantages


What is universal basic income?

  • Universal basic income is the periodic unconditional transfer of money to every citizen in the country.
  • The idea of universal basic income was first mooted in India through Economic Survey 2017.

यूनिवर्सल बेसिक इनकम: परिभाषा, लाभ एवं हानि 

Universal basic income: Pilot project

UBI was started on a pilot basis in Madhya Pradesh and West Delhi. It led to following advantages:

  • Nutrition improved
  • sanitation improved
  • health and healthcare improved
  • school attendance and performance improved
  • women’s status and well-being improved
  • the position of the disabled and vulnerable groups improved more than others
  • Amount and quality of work improved

Advantages of Universal basic income

  • UBI strengthens the economic liberty of an individual, who can spend the money according to his/her need.
  • UBI act as an insurance against unemployment, and the emergencies like COVID-19.
  • UBI is a step towards equitable distribution of wealth in a society.
  • Under UBI, there is no need to identify the beneficiaries. It saves the government machinery from committing inclusion and exclusion errors.
  • UBI reduces wastage in govt transfer through various subsidies.
  • UBI increases the bargaining power of the lower strata of the population and they could not be forced to accept any working condition.
  • UBI would increase the demand for financial services, which will in turn help in strengthening financial inclusion.
  • UBI can be a possible solution to loan waiver.


Disadvantages of Universal basic income

  • UBI is often criticised as it breeds dependency and make people indolent.
  • The money might not be used in fields like education and health and has the potential to be diverted to other non-productive areas.
  • UBI is deemed to increase the financial burden on the state exchequer, hence questioning the fiscal prudence of the government.
  • In the absence of better support to supply side constraints, UBI is bound to increase inflation.
  • It kills the need for work and may encourage individuals to take up the wrong path.
  • UBI can also reduce the availability of workers as workers might not feel necessary to work.
  • UBI does not solve the fundamental problems of the economy and only treats the symptoms.


Universal Basic Income: Definition, Advantages and Disadvantages_3.1


Universal Basic Income: Way forward

  • UBI has already been experimented in countries like US, Canada, Finland, Spain etc.
  • India has the technological capacity and financial resources to liberate the masses from economic deprivation, insecurity and degradation.
  • Need to train and streamline local level officers for the proper implementation of Universal Basic Income.
  • UBI is dubbed as the income redistribution scheme of 21st century.
  • Need to bring universal basic capital. Models like amul, sewa, where people own the wealth they generate.


Read UPSC favourite topics

Migrant Workers in India: Issues, Government Steps, Recommendations Biodiversity Hotspots in India Speaker of the Lok Sabha Bullet Trains: Does India Need Them?
Updated List of Geographical Indication Tags in India Unorganised Sector in India International Telecommunication Union (ITU) | India Secures Leadership Position Genome Editing and CRISPR-CAS9: Definition | Working | Advantages | Challenges
Term of Office and Removal of the Vice-President of India Factors Affecting the Velocity and Direction of Wind Powers and Functions of Vice President of India Understanding Unemployment Types: Organised, Unorganised, Formal and Informal
Microfinance Institutions (MFI) Gram Nyayalayas | Gram Nyayalayas Act 2008 Minamata Convention on Mercury Types of Tillage: Conventional and Conservation Tillage

Sharing is caring!

Leave a comment

Your email address will not be published. Required fields are marked *