Redistribution, Rent-Seeking, and the Welfare Effect of a Universal Basic Income in India

Nicholas Lawson and Dean Spears

Economic Development and Cultural Change, 2026, vol. 74, issue 3, 971 - 995

Abstract: Existing research has argued that, even if targeting of government transfers is inaccurate in developing countries, it may be better to give more to those who seem to be poorest rather than a universal basic income (UBI) to everyone. However, in a country such as India that is characterized by corruption in the public service, targeting imposes additional social costs by enabling local government agents to seek rents while identifying “poor” agents who should receive a transfer. We calibrate a simple model of targeting and find that rent-seeking may be sufficient to make a UBI the optimal policy for India.

Date: 2026
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