Redraw Welfare Architecture, Place a UBI in the Centre

The Hindu

1. Introduction and Context

This editorial examines the urgent need to redesign India’s welfare architecture, arguing that Universal Basic Income (UBI) should form the core pillar of a modern, inclusive social protection system.

The discussion arises amid growing inequality, job stagnation, and welfare inefficiencies that have persisted even after the pandemic. The author situates UBI as both an economic stabilizer and a moral corrective, aligning India’s welfare model with global trends in direct income transfers.

Framed within the philosophy of Atmanirbhar Bharat and Viksit Bharat 2047, the piece positions UBI not as charity, but as a rights-based guarantee of economic dignity in a rapidly transforming economy.

2. Key Arguments and Core Discussion

a. The Inequality Problem

• The top 10% of Indians hold over 77% of national wealth, while the bottom 50% remain trapped in low-wage, precarious employment.
• Despite sustained GDP growth, income and opportunity inequality have widened, limiting inclusive prosperity.
• Traditional welfare systems — though extensive — have failed to bridge structural gaps in income distribution and social mobility.

b. Welfare Model Fatigue

• India’s current welfare regime — built around PDS, MGNREGS, PM-KISAN, and subsidies — suffers from fragmentation, overlap, and inefficiency.
• Leakages and exclusion errors persist despite digitization, leaving vulnerable populations outside safety nets.
• The author argues that the existing system has hit a policy ceiling, offering short-term relief but no structural security or empowerment.

c. The Case for Universal Basic Income (UBI)

• A UBI — a regular, unconditional cash payment to all citizens — can simplify and rationalize India’s complex welfare web.
• Benefits include:
• Administrative simplicity via Direct Benefit Transfer (DBT).
• Elimination of corruption and intermediaries.
• Freedom of choice, allowing citizens to spend or invest per their needs.
• Demand stimulus, boosting economic activity from the bottom up.
• The Economic Survey (2016–17) had already identified UBI as a “radical and compassionate reform,” capable of transforming welfare delivery.

d. Fiscal Feasibility and Pragmatism

• Critics call UBI fiscally unsustainable, but the author argues resource reallocation can make it viable.
• India currently spends over 10% of GDP on subsidies and welfare schemes — rationalization could free funds for quasi-universal cash support.
• The editorial advocates a phased or targeted approach, starting with informal workers, rural poor, or distressed states.

e. Redefining the Social Contract

• Beyond economics, UBI represents a new social philosophy:
• Every citizen, by virtue of citizenship, deserves a minimum income floor.
• It shifts the welfare model from paternalistic state dependency to citizen empowerment and dignity.
• UBI symbolizes a democratic dividend — distributing the gains of national growth more equitably.

f. Global and Technological Context

• Global pilots (Finland, Canada, Kenya) show improved well-being and job-seeking behavior.
• India’s digital infrastructure — JAM trinity (Jan Dhan–Aadhaar–Mobile) — provides a ready platform for efficient delivery.
• With AI and fintech innovations, real-time targeting, transparency, and feedback are now operationally feasible.

3. Author’s Stance

The author’s stance is pro-reform and pragmatically pro-UBI.
He views UBI as both a moral necessity and a fiscal innovation, capable of addressing inequality while modernizing governance.

The tone is assertive yet balanced — rooted in compassion but grounded in economic realism. The author acknowledges fiscal constraints but argues for gradual, evidence-based implementation through pilot models and phased expansion.

4. Biases Present

5. Pros and Cons

 Pros

• Holistic Vision: Advocates complete welfare restructuring, not piecemeal reform.
• Economic Rationale: Positions UBI as both growth stimulus and safety net.
• Digital Feasibility: Builds on India’s robust JAM and DBT ecosystem.
• Social Justice Dimension: Emphasizes dignity, equality, and citizen autonomy.

 Cons

• Fiscal Uncertainty: No detailed modeling of subsidy trade-offs or inflation risks.
• Implementation Politics: Overlooks bureaucratic resistance and federal complexities.
• Service Neglect: Risks weakening public investment in health, education, and infrastructure.
• Inflation and Dependency Risks: Large-scale cash infusion could distort local markets without adequate productivity growth.

6. Policy and Governance Implications

a. Welfare Rationalisation

• Merge overlapping schemes into a unified income transfer system.
• Use Aadhaar and SECC data for dynamic targeting and leakage reduction.

b. Fiscal Reallocation

• Redirect non-merit subsidies (fertilizer, power, LPG) to fund UBI.
• Introduce progressive tax reforms — wealth and inheritance taxes to sustain redistributive justice.

c. Institutional Transformation

• Establish a National Social Protection Authority to integrate UBI design, fiscal planning, and evaluation.
• Align central and state-level transfers for better coordination.

d. Gradual Implementation

• Start with pilot regions or occupational groups (e.g., informal workers, small farmers).
• Introduce quasi-universal UBI before full rollout.

e. Citizen Empowerment

• Frame UBI as a constitutional right to minimum livelihood, reinforcing dignity and equality.
• Shift from “beneficiary-based welfare” to “citizenship-based entitlements.”

7. Real-World Impact

Positive:

• Strengthens consumption-driven growth and rural demand.
• Reduces poverty volatility and distress migration.
• Enhances individual autonomy, especially for women and informal workers.
• Improves welfare efficiency through DBT integration.

Negative:

• Fiscal mismanagement could trigger budget deficits and inflationary pressures.
• Without health and education investment, UBI’s benefits may remain transient.
• Political populism could distort UBI into vote-based giveaways rather than structural reform.

8. Alignment with UPSC GS Papers

9. Conclusion

The editorial powerfully asserts that India’s welfare state must evolve from fragmented subsidies to a unified, dignified income system.
UBI, by ensuring a minimum income floor for all citizens, can become the foundation of a modern social contract — one based on autonomy, equity, and mutual trust between citizens and the state.

However, the path forward must blend fiscal realism, institutional capacity, and ethical clarity.
UBI should complement, not replace, essential public services — ensuring both economic stability and human development.

As the author concludes, “India must redraw its welfare architecture — not as a patchwork of relief, but as a blueprint of rights.”

10. Future Perspectives

1. National Pilot Programs:
   Launch phased UBI pilots across rural and urban states to assess fiscal impact and behavioral outcomes.
2. Fiscal Innovation:
   Combine targeted subsidy reforms with progressive taxation and carbon dividends to fund UBI.
3. Digital Delivery Infrastructure:
   Strengthen JAM and AI-based verification to prevent duplication and fraud.
4. Climate and Automation Linkage:
   Integrate UBI with green economy transitions and automation-related job loss mitigation.
5. Hybrid Welfare Model:
   Combine UBI for income stability with strong public services for capability building (education, health, housing).

Balanced Summary

The editorial envisions Universal Basic Income as India’s next welfare revolution — a transformative shift from state-led distribution to citizen-led empowerment.
UBI promises both administrative efficiency and moral equity, but its success will depend on political consensus, fiscal discipline, and institutional innovation.