New Delhi: Days after the Union government received flak for reducing spending on welfare schemes in the budget for 2024-25, chief economic advisor V. Anantha Nageswaran has said that policymakers should study whether well-intended welfare schemes might be deterring India’s youth from seeking employment.
Nageswaran was speaking at the launch of ‘The State of Rural Youth Employment Report 2024’, the Indian Express reported.
His remarks have come at a time when India is facing unprecedented levels of unemployment coupled with rural distress and high food inflation.
While citing studies conducted in the US and Europe – regions that are vastly different from India, both economically and at the societal level – Nageswaran said that “a certain behavioural consequence in terms of willingness to offer the supply of labour on the part of the youth” may be observed.
“Just a couple of days ago in the United States, there was a paper that was released based on a pilot study done in two states… (it is) showing that something similar to universal basic income, which was implemented in those states, actually led to a lower willingness on the part of the labour to offer their supply,” Nageswaran said in his address.
The chief economic advisor to the Union government also said that when looking at unemployment in the country, it is important to determine how much of it is voluntary and how much is involuntary
“Sometimes, we do many of these things with very good intentions but the behavioural signals that they send are very different… I have nothing more to add except to say that when we design [schemes], we must think about eligibility conditions, sunset clause, sunset terminal dates, and eventually the idea is to enable people to participate in economic activity. Economic activity happens outside the government, not inside the government, and that is what we should be facilitating with our welfare schemes and non-welfare schemes as well,” he said.
Nageswaran also raised concerns about the potential “informalisation” of the labour force post-Covid, particularly in relation to the growing gig economy, the report said.
“We need to study whether Covid by any chance contributed to actually returning to informalisation of the labour force. That is something we need to get more data [on] and see if that happened because this phenomenon of gig workers is something that we need to understand a lot more. If so, we need to address it because it does lead to certain lack of protection, social security,” he said.
Employment schemes like MNREGA along with other social welfare schemes like Pradhan Mantri Matru Vandana Yojana, National Social Assistance Programme (NSAP), Mid-Day Meal programme and ICDS (Integrated Child Development Services) have witnessed a rapid decline since the 2019-20 Budget.
In this year’s budget, Pradhan Mantri Poshan Shakti Nirman (PM POSHAN) showed a marginal increase in allocation from Rs 10,000 crore in FY 2023-24 RE to 12,467 crore in FY 2024-25 BE.
The NSAP, which includes the National Old Age Pension Scheme, the Indira Gandhi National Disability Pension Scheme and the National Family Benefit Scheme have been stagnant at 0.2% of the total expenditure.
For Saksham Anganwadi and POSHAN 2.0 scheme for children under five, pregnant and lactating women and adolescent girls, the allocation has increased slightly from Rs 20,544 crore in FY 2023-24 to Rs 21,200 crore this year.
Pradhan Mantri Kisan Samman Nidhi (PM-KISAN), which aims to provide financial assistance to farmers’ families, was allocated the same amount as last year at Rs 60,000 crore. Meanwhile, MGNREGA, which provides rural employment, was allocated only Rs 86,000 crore, the same as in FY23 (revised estimates). There has not been a sufficient increase in the allocation to this scheme, which is still in high demand in rural areas.
