According to World Bank report 22% of Indians live below poverty line. With such a large population unable to support themselves, does targeted basic income make sense? Critically examine.

TBI is premised on the idea that each poor individual needs guaranteed minimum income which they can count on and also provide the necessary material foundation for a life with access to basic goods and a life of dignity . It must ensure that every poor person should have right to basic income to cover their needs just by virtue of being citizens. There are several merits of TBI such as  Social justice by reducing inequality; assured poverty reduction; insurance against health, income and other shocks; Improving financial inclusion by direct benefit transfer system; psychological benefits by reducing the pressure of finding a basic living on a daily basis and administration efficiency. However, In our view, the system may not work well with India. The key reasons behind this include: Conspicuous spending especially by male beneficiaries; Moral hazard that tt can make people lazy and opt out of the labor market and cause labor market distortion; gender disparity induced by cash where men are likely to exercise control over spending of TBI, which is not always in the case with other kind transfer like PDS; stress on banking system for delivery of TBI and high fiscal costs involved.

Topics: GS-II: Social Sector Services Education Human Resources