Advantages
- Increases effectiveness of anti-poverty programs by reducing government departments.
- Reduces costs involved in distribution.
- Removes possibility of leakages and diversion (e.g., DBT in LPG).
- Frees up prices of goods, allowing efficient resource allocation.
- Does not distort the market (unlike price subsidies).
- Can be given to a class of population (PM-KISAN) or entire population (UBI).
Disadvantages
- May reduce incentive to work (moral hazard argument).
- May promote spending on “vice” or “temptation goods” (alcohol, tobacco).
- Can impose significant burdens on already stretched government budgets.
- Cannot be a long-term answer for poverty eradication.
- Does not address capability deprivation directly.