Universal Basic Income in India: A Radical Solution for a Transforming Nation
India stands at a crossroads. With a population of over 1.4 billion, a booming tech sector, and a youthful demographic dividend, the country is poised for unprecedented growth. Yet, beneath the surface of this promise lie challenges: rising unemployment, the disruptive rise of artificial intelligence (AI), and stark inequality. Could Universal Basic Income (UBI) — a system where every citizen receives a regular, unconditional sum of money — be the key to navigating this complex future? Let’s explore how UBI might fit into India’s present and what it could mean for the decades ahead.
The Indian Context: A Land of Opportunity and Struggle
India’s economy is a paradox. On one hand, it’s one of the fastest-growing in the world, with GDP growth rates often hovering between 6–8% in recent years. The IT sector, startups, and manufacturing are thriving, fueled by a young workforce — over 65% of Indians are under 35. This “demographic dividend” is a golden ticket: a massive pool of labor to drive productivity and innovation.
But the numbers don’t tell the whole story. Unemployment remains a stubborn problem, with the rate fluctuating around 7–8% in 2024, according to various estimates. For rural India, where agriculture employs nearly 42% of the workforce, mechanization and climate change are shrinking opportunities. Urban youth, even those with degrees, often face underemployment or gig work with little security. Add to this the looming shadow of AI, and the picture gets murkier.
AI and the Jobs Conundrum
Artificial intelligence is no longer a futuristic buzzword — it’s here, reshaping industries at lightning speed. In India, AI is already automating tasks in IT, manufacturing, and even agriculture. A 2023 Nasscom report projected that AI could add $500 billion to India’s economy by 2030, but it also warned of job displacement. Routine jobs — think data entry, assembly-line work, or basic customer service — are increasingly handled by machines. While AI creates new roles (data scientists, AI ethicists), these demand skills that much of India’s workforce doesn’t yet possess.
For a country banking on its young population, this is a double-edged sword. The demographic dividend could turn into a demographic disaster if millions of workers are left jobless or stuck in precarious gig roles. This is where UBI enters the conversation — not as a silver bullet, but as a potential safety net.
What UBI Could Look Like in India
UBI proposes a simple idea: give every citizen a regular payment, no strings attached. In India, this could mean a monthly sum — say, ₹5,000 (about $60) — enough to cover basic needs like food and shelter, but not so much as to discourage work. Pilot projects, like the 2011–2012 experiment in Madhya Pradesh, offer clues. In that study, funded by UNICEF, villagers received modest payments for 18 months. The results? Improved nutrition, school attendance, and even small-scale entrepreneurship, with no significant drop in work effort.
Scaled nationally, UBI could address India’s present inequalities. Over 20% of Indians live below the poverty line, and welfare schemes like food subsidies or rural employment programs often suffer from leaks and inefficiency. A direct cash transfer could cut through red tape, putting money straight into people’s hands. For rural farmers facing crop failures or urban gig workers between jobs, it could mean stability in an unstable world.
The Future: AI, UBI, and India’s Youth
Looking ahead to 2035 or 2040, India’s AI-driven transformation will likely deepen. Self-driving trucks could replace drivers, AI diagnostics could outpace doctors in rural clinics, and e-commerce bots could shrink retail jobs. Yet, this disruption could also free up human potential — if paired with UBI. Imagine a young coder in Bengaluru using UBI to take a risk on a startup, or a farmer’s daughter in Bihar funding her coding bootcamp without debt. UBI could act as a launchpad, turning India’s youth into innovators rather than casualties of automation.
Critics, however, argue it’s a pipe dream. India’s fiscal deficit is already strained, and funding UBI could cost upwards of 5–10% of GDP annually — hundreds of billions of dollars. Where would the money come from? Proposals range from taxing the super-rich (India’s top 1% hold over 40% of wealth) to redirecting existing subsidies. Yet, political will and administrative capacity remain hurdles. Corruption could siphon funds, and skeptics warn that cash handouts might fuel inflation or laziness — though evidence from pilots suggests otherwise.
The Demographic Dividend at Stake
India’s window to capitalize on its young population is finite. By 2040, the median age will rise, and the dependency ratio (non-workers to workers) will climb. If AI displaces jobs faster than new ones emerge, this could mean a generation of frustrated youth — fuel for social unrest rather than economic growth. UBI could buy time, giving people the breathing room to retrain, experiment, or simply survive while the economy adjusts.
Compare this to a no-UBI future: widening inequality, urban slums swelling with the unemployed, and rural distress pushing migration to breaking points. The cost of inaction might dwarf the price tag of UBI.
A Balancing Act
UBI isn’t a standalone fix. India needs parallel investments — massive upskilling programs to prepare workers for an AI world, better infrastructure, and policies to boost job creation. But as a complement, UBI could smooth the transition, ensuring that the benefits of growth and technology don’t just accrue to the elite.
In a nation as diverse as India, one size won’t fit all. A tiered UBI — higher for the poorest, tapering off for the middle class — might be more feasible. Or perhaps a “negative income tax,” where only those below a threshold get cash. The devil’s in the details, and India’s policymakers would need to experiment, iterate, and learn.
The Road Ahead
India’s future hinges on bold ideas. Universal Basic Income isn’t just about money — it’s about dignity, opportunity, and resilience in a world where AI is rewriting the rules. The present demands action: a workforce supported, not sidelined, by technology; a demographic dividend harnessed, not squandered. UBI could be the radical rethink India needs — a bridge between today’s struggles and tomorrow’s promise.
Will it work? No one knows for sure. But in a country that’s defied odds before — from independence to the tech boom — betting on its people might just be the smartest move yet.
