What is Universal Basic Income?


  • Sikkim will be the first state in India to roll out the Universal Basic Income or UBI, with the ruling party Sikkim Democratic Front (SDF) including it in its manifesto ahead of the state’s Assembly election this year.

The Universal Basic Income:

  • The Universal Basic Income, implementation of which has repeatedly been debated in India, seeks to alleviate poverty by providing a basic income to all citizens of a particular state or geographical area, irrespective of their income, social standing, or employment status. The idea behind a basic income is that all are entitled to a reasonable income, notwithstanding their contribution to the economy.

The BIEN (Basic Income Earth Network):

  • A network of academicians advocating for UBI to all — describes basic income as a “periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement.”
  • It characterises the basic income in five divisions — Periodic (being paid at regular intervals, not lump sum), cash payment (not in kind or vouchers, leaving it on the recipient to spend it as they like), individual (not to households or families), universal (for all), and unconditional (irrespective of income or prospects of job).
  • But the implementation of the scheme is not void of challenges. One of the key arguments against it is that people would rely on the timely cash transfers and not aspire for work and fail to contribute to production.

However, the Economic Survey of India 2016-17 painted a different picture while advocating for the UBI. Then Chief Economic Adviser Arvind Subramanian compared its benefits with that of welfare schemes it can replace, concluding that

  • UBI could be a “choice over current entitlements” including the Public Distribution System (PDS) that provides subsidies to the vulnerable. How the UBI amount is determined is not a one-time exercise.
  • It is determined by inflation in the economy.
  • The Economic Survey 2017, however, suggested a constant share of the GDP for its consumption, estimated at 4.9% of the Gross Domestic Product.

A 40-page chapter, called Universal Basic Income: A Conversation With and Within the Mahatma, outlined the UBI in three components —

  1. universality,
  2. unconditionality, and
  3. agency (by providing support in the form of cash transfers to respect, not dictate, recipients’ choices).
  • The chapter argues how the idea of a basic income conflicted with the ideas of Mahatma Gandhi. Subramanian, a keen defendant of the idea, had then said Gandhi would have had objections to it, including giving charity to able-bodied persons, costing the government 5-10 per cent of the GDP, and men misusing the money.

Arguing in favour, Subramanian had said,

  • “The first thing that I will tell Gandhiji is that today the government spends a lot of money on schemes to help the poor.
  • Today there are at least 1000 schemes that the central government runs for the poor… It is not clear that the money actually reaches the poor. So the question is whether the UBI is a more effective way of reaching the poor that the current schemes that government employs.”
  • The recent government was also known to be considering implementing the Universal Basic Income for all citizens of the country, giving unconditional cash transfer of about Rs 10,000-15,000 on an annual basis.

A pilot project:

  • By the Self Employed Women’s Association (SEWA) and the United Nation’s Children’s Fund (UNICEF) was implemented in Madhya Pradesh from June 2011 to November 2012, where unconditional cash transfers (UCT) were provided to the people.
  • Citing the study, the Economic Survey 2016-17 claimed that “people become more productive when they get a basic income”.

A Universal Basic Income promotes

  • many of the basic values of a society which respects all individuals as free and equal.
  • 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.
  • And it could, under some circumstances, even promote greater productivity,” it further read.


  • Whether the basic income will work in a country of over 120 crore, and how is a matter for bigger discussions, but with Sikkim taking the charge, it adds another feather to the cap of the state which is ahead in several other areas- its literacy rate is 98 percent, and the state assembly, in December last year, approved the ‘one family, one job’ scheme to create over 16,000 jobs. The BPL percentage has come down from 41.43% in 1994 to 8.19% in 2011-12.


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