Challenges in its implementation

♤ Given the current status of financial access among the poor, a UBI may put too much stress on the banking system

♤ Gender disparity induced by cash- Gender norms may regulate the sharing of UBI within a household – men are likely to exercise control over spending of the UBI. This may not always be the case with other in-kind transfers.

♤ Fiscal cost given political economy of exit -Once introduced, it may become difficult for the government to wind up a UBI in case of failure.

♤ Opposition may arise from the provision of the transfer to rich individuals as it might seem to trump the idea of equity and state welfare for the poor.

♤ Exposure to market risks (cash vs. food)- Unlike food subsidies that are not subject to fluctuating market prices, a cash transfer’s purchasing power may severely be curtailed by market fluctuations

♤ Moral Hazard- A minimum guaranteed income might make people lazy and opt out of the labour market.

In spite of various challenges, implementing UBI in India is desirable due to high inequality, weaknesses in existing welfare schemes (which are riddled with misallocation, exclusions and leakages) and fast progress in JAM scheme. Moreover UBI stands greater chance in a developing country like India, where it can be pegged at relatively low levels of income but still yield immense welfare gains.