The idea that the welfare state should give its citizenry a minimum income is gaining currency.Deliberate the following proposal for income tax. The total tax that you pay (T) is equal to a linear formula T = A + BX. Here ‘X’ is your annual income, ‘B’ is the tax rate (say 20 percent) and ‘A’ is a negative number (say minus 5000). So if your income is Rs 2 lakh a year (roughly equal to the per capita income of Mumbai), then your tax liability is -5000 + 0.2 (2,00,000) = Rs 35,000.Actually, people who earn less than Rs 2.5 lakh, are exempt from paying income tax under the current rates. So we will have to tweak our formula a bit to make it consistent with exemptions and other caveats. But consider another important implication of this. If your income is zero, then your tax liability is -5,000. In this scenario, your government will owe you Rs 5,000.What are the possible advantages of offering wage-less workers (X=0) a kickback from the government? For one, it would mean that women, who shoulder a disproportionate burden of unpaid work in the economy, will have some purchasing power. It also means that people who are in between jobs and rendered temporarily income-less, will have something to fall back on. Will it reduce their incentive to look for work? Not really, because the amount is small. We could adjust the equation so that the pay-out wouldn’t be restricted to those who can’t secure any income at all, but be a benefit that accrues to everyone living at the poverty line. As such, it seems sensible, and is already the basis of many poverty alleviation schemes.Now imagine the more radical concept of extending this benefit to every adult citizen of India. To implement, the first precondition will be that each citizen gets themselves a Permanent Account Number (PAN). Next, they will need to open a bank account. This can now be done easily under the Prime Minister’s Jan Dhan Yojana, which allows you to open an account even with zero balance. Then we are (logistically) ready to pay every adult Rs 5,000 (or whatever amount the variable A represents) independent of their income.This is the idea behind Universal Basic Income (UBI)—the dividend of being Indian, so to speak, that will be paid out to each of its people, independent of whether they are working or not working. UBI alone will not suffice to make ends meet, for anybody. But having that “security” removes the stress and anxiety that workers and households feel about irregular monthly incomes. At present only 10 percent of India’s labour force can claim some job security and retirement benefits. The remaining 90 percent are part of the unorganized or informal sector. The UBI would be crucial in “income smoothing”, offering the guarantee of at least some regular monthly income.Is this a pipe dream, or a feasible scheme? How much will this cost? Assuming that India has roughly 700 million people between the ages of 18 and 60, the price tag will be 3.5 trillion rupees, or about 3 percent of current GDP. That seems huge and unaffordable. But the challenge may be surmountable.For instance all the subsidies meant for the poor are more than 4 per cent of GDP (centre plus states). Some of these could be discontinued when we have the UBI. Secondly, with the introduction of the Goods and Services Tax (GST), the tax collection is expected to go up, and so is GDP.That extra resource can be used for UBI. Thirdly, if we remove many of the tax exemptions and loopholes currently available, tax collection will go up considerably. Take for example, income earned on dividends and capital gains – it is completely tax free and the money mostly goes back into the pockets of the rich. It can be brought into the tax net.The UBI is based on a Gandhian principle-—societal welfare is determined by how we treat our worst off. Under UBI everybody will get at least Rs 5,000 (or whatever number we decide) – it may not mean much to the rich, but it will make a significant difference to the lives of the poor, without being perceived as an inequitable handout or charity.Many advanced economies are already welfare states, in that they give income (pension) to every one above 65, and free medical care to the poor. This week the proposal of allotting $2,500 UBI (2,500 Swiss francs) per person per month, was defeated at a referendum in Switzerland. That’s probably because it was too generous. The concept is here to stay, and sooner or later you will see it implemented across the world.