Despite a plethora of social protection programmes, India still has a long way to go in ensuring basic welfare outcomes for all its citizens.

A major hurdle is effective implementation: execution of programmes is plagued by misallocation and leakage of resources, benefits going to non-targeted persons (inclusion errors), and intended recipients getting deprived of benefits (exclusion errors). The Government of India’s Economic Survey 2016-17 estimated that even programmes that receive the most funds and attention have targeting errors as high as 60-70%.[i]

A. Immediate Future: Direct Benefit Transfers

To tackle some of these implementation challenges, India is now attempting to reform the mechanism of transferring benefits from in-kind transfers to Direct Benefit Transfer (DBT). By minimising the tiers involved in fund flow, the DBT programme launched in January 2013 hopes to ensure accurate targeting, curb pilferage and duplication, reduce delays in payment, and bring down administrative costs.

The biggest challenges for DBT in India are the low penetration levels of banking services, and correct identification of beneficiaries to plug leakages. To address these, a financial inclusion campaign (PM Jan-Dhan Yojana) was started in 2014 to ensure universal access to banking and financial services. Another initiative is the Aadhaar project launched in 2010 which issues a unique, biometric ID to all Indian residents.

Expansion of banking and unique identification of beneficiaries are pre-requisites for nation-wide implementation of DBT. As of now, DBT has been piloted in selected areas, and lessons from the pilot will inform future implementation of DBT.

B. Long-Term Future: Universal Basic Income?

Having prepared the ground for direct transfer of benefits, India is now in the initial stages of considering the idea of Universal Basic Income. The Government of India’s annual Economic Survey 2016-17 explores how various welfare programmes might be replaced with a universal basic income paid to every citizen, and pegs the illustrative cost of UBI at ~5% of the GDP.

The case in favour of UBI is made out in terms of enhancing social justice, providing agency to the poor, enhancing flexibility of employment (and hence labour markets), and providing the psychological benefits of a minimum guaranteed income (it is known that abject poverty results in depletion of cognitive resources required for important decision-making, and low self-image that blunts aspirations[ii]). Most importantly, the administrative ease of UBI acts as the biggest incentive for Indian policymakers. Within the Economic Survey, the rationale against UBI has also been emphasised, which includes reduced incentives to work and the possibility of misuse (e.g. spending on temptation goods like alcohol and tobacco).

The concept of UBI is gaining ground in India, but it has vociferous critics as well. Apart from the downsides of UBI highlighted in the Economic Survey, there are several other issues that merit discussion before the idea is considered for implementation.

The first issue is the intent of introducing UBI: Would it serve as an additional safety net for the poor, or would it replace all existing social programs? This determines the amount of UBI we may be looking at, which, in turn, begs the question: What is ‘basic income’? The definition of ‘basic’ can be a matter of endless debate, as evidenced by furore over every determination of the poverty line in India. Given fiscal constraints, an ‘additional’ UBI cannot hope to meet the currently specified poverty baseline of ~Rs. 10,800 ($165) per year, whereas a UBI that replaces all welfare programs can make the poorest citizens worse off. Eliminating a host of welfare programmes – each focused on a specific aspect such as health, nutrition, employment, maternal & infant wellbeing, etc. – to make way for a fixed, bare minimum income offered to all, might end up in overall reduction of benefits to those who are vulnerable and need them the most.

The second issue is one that divides people into different schools of thought: What should be the government’s role in the economy, particularly in ensuring welfare? Currently, India’s social protection system is based on in-kind benefits, which requires the government to ensure that the poor have access to certain welfare objectives, e.g. nutritional intake (school meal scheme, PDS), availability of employment in rural areas (MGNREGS), access to affordable health and primary education infrastructure (public hospitals and schools). The government is obligated to provide this; whether it can successfully do so is another matter. As opposed to this, the idea of UBI requires the government to make available a certain minimum income to all citizens, after which the citizens would be responsible for attaining welfare objectives themselves. Critics of UBI argue that this is akin to the government abdicating its responsibility to ensure that the final welfare objectives are indeed met by all citizens. Examples of UBI-welfare divergence could be: basic income falling behind price inflation, social/market barriers (e.g. denial of access by private supplier to certain castes), individual actions by household decision-makers compromising the welfare of others (e.g. spending on alcohol instead of food, using cash transfers to purchase items other than essential consumption, girl children facing nutritional neglect within their family).

The third issue is the universal nature of UBI, as it translates into a huge fiscal burden for a country with 1.26 billion people. However, there is enough evidence to show that targeting of social programmes has never worked in India, with inclusion and exclusion errors being extremely high. The Government has indicated in the Economic Survey that it would rather include non-deserving people and face a higher fiscal burden than leave out deserving beneficiaries. Realistically, it is easier to identify non-beneficiaries than beneficiaries (through tax returns, asset ownership, etc.). The way forward, then, should be universal applicability, except for those who can distinctly be identified as rich.

Another issue deals with the market environment necessary for this concept. UBI – particularly the aspect of providing agency and choice to beneficiaries – works when there are well-functioning markets (e.g. no hoarding of foodgrains to inflate prices), supply-side adequacy, forward & backward linkages, and adequately informed buyers. India, however, has a long way to go before there are market conditions ready to support true welfare choices being exercised by users.

For a country like India, the advantages of a ‘neat’ benefits transfer over the messiness of numerous inefficient, leaky and administratively cumbersome welfare programmes cannot be denied. There are many other positives to UBI ranging from providing agency to beneficiaries to the psychological benefits of assured minimum income.

However, an objective assessment of the idea shows that beyond these positives are more nuanced aspects that need to be addressed while discussing UBI. The Government has shown its willingness to discuss the issue but the discussion should be wide-ranging enough to accommodate all schools of thought, and focused on evidence-backed potential for impact rather than ideology or political expediency.

The UBI debate is long and it is just beginning.


This blog post is published as part of the Ambassador Series, which presents insights into social protection around the world from the viewpoint of our Ambassadors, a group of international online United Nations Volunteers who support the online knowledge exchange activities, networking and promotion of


[i] Ministry of Finance, Government of India. 2017. Economic Survey 2016-17.

[ii] The World Bank. 2015. World Development Report.

Kapur, D., P. Mukhopadhay and A. Subramanian. 2008. “The Case for Direct Cash Transfers to the Poor.” Economic and Political Weekly. 12 April.

Shah, M. 2008. “Direct Cash Transfers: No Magic Bullet.” Economic and Political Weekly. 23 August. 

(Banner image: Noah Seelam/AFP)

Social Protection Programmes: 
  • Social assistance
    • Social transfers
      • Cash transfers
        • Conditional cash transfers
        • Unconditional cash transfers
Social Protection Building Blocks: 
  • Programme design
    • Conditionalities
  • Programme implementation
    • Benefits payment / delivery
Social Protection Approaches: 
  • Political economy
  • Universal Social Protection
Cross-Cutting Areas: 
  • Financial education and inclusion
  • India
  • South Asia
The views presented here are the author's and not's


Thanks for this Amiya - a very interesting and thought provoking article. 

If anyone wishes to learn more about social protection, the Economic Policy Research Institute runs annual social protection courses in Cape Town, South Africa and Chiang Mai, Thailand.

The courses aim to build the capacity of government policymakers and officials, representatives from bilateral and multilateral agencies, programme practitioners, researchers, project managers and staff members from non-governmental organisations. The course will serve those who want to more effectively design, implement and manage social transfer programmes with the goal of reducing poverty and better achieving the Sustainable Developmental Goals. 

This year, our Cape Town course is taking place 7 - 18 August, and Chiang Mai 2 - 13 October.

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