Research studies on the implementation of the Karnataka Government’s guarantee schemes, while lauding the initiatives for increasing the incomes of families, have also flagged several concerns and recommended that the Government re-examine some of the schemes.
While one study highlighted that schemes such as Gruha Lakshmi, which ensures Rs 2,000 per month for women heads of families, helped increase food consumption and access to financial infrastructure, another said that welfare schemes were not a substitute for comprehensive economic strategy and schemes like Yuva Nidhi, unemployment allowance for a fixed period, could have an adverse effect on labour force participation.
The five guarantee schemes implemented in Karnataka are Gruha Lakshmi; Gruha Jyothi, free power up to 200 units; Anna Bhagya; subsidised food grains; Shakthi, free bus travel in non-premium buses for women, and Yuva Nidhi.
The five schemes introduced after the Congress came to power in 2023 had a budgetary outlay of around Rs 51,000 crore for 2025-26.
‘Not a substitute for a comprehensive strategy’
An assessment of the five schemes by a Mumbai-based research group flagged the opportunity cost of public resources allocated to these schemes. “If, hypothetically, the same money was channelled into public goods, there would be magnified economic gains for the state. Welfare schemes, however well-implemented, are not a substitute for a comprehensive economic strategy,” it said.
The study recommended scaling down the number of beneficiaries so as to reduce the requirement of cash on the first of each month and “an overall strategy of fiscal prudence through which the treasury is always able to make the payment of Rs 2,000 to a certain list of beneficiaries on the first of every month”. A focus on a higher growth strategy is the key, the study said.’
‘Adverse impact of Yuva Nidhi dole’
The Yuva Nidhi scheme, it said, could have an adverse impact on labour force participation. “When young graduates have more money in hand, this is likely to make them less inclined to accept job offers. The scheme, as designed, likely increases the reservation wage of graduates, potentially delaying their entry into the workforce. Global evidence shows that early career experience is critical for long-term wage growth. The policy may be inadvertently incentivizing a delay that harms long-term career prospects,” the study added.
From Guarantees to Rights: Assessing Karnataka’s Experiment with Basic Income and Basic Services, a study by King’s College London, hailed the social impact of the Gruha Lakshmi scheme on women. A survey of 2,045 women found that 99 per cent of the beneficiaries had full control of the funds released by the state, which was “largely spent on food, household expenses, medicines and children’s fees”.
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The study found a significant increase in food consumption among beneficiary families, with the respondents feeling that the scheme enabled women to have better access to financial infrastructure. “Gruha Lakshmi is pushing women toward mainstream banking systems and strengthening their financial inclusion,” it said, noting that the intra-household bargaining power of beneficiaries saw a slight increase.
“Nearly half the respondents (48%) felt that the Gruha Lakshmi scheme had reduced day-to-day conflicts within their households, with 42% reporting no noticeable change, and the remaining 10% believe that conflict had actually increased,” the study said.
The major complaint regarding the Gruha Lakshmi scheme was the delay in payment. “99.8% of the women stated that they received the full Gruha Lakshmi amount; however, a large portion of beneficiaries experienced delays of more than one month in receiving their payments,” it noted. The study also assessed other schemes benefiting women, such as Gruha Jyothi, Shakthi, and Anna Bhagya.
Lauding the “bold experiment in providing universal basic services”, the study added, “…fiscal pressures, impediments to inclusion, and infrastructural concerns threaten to undermine their benefits. There must also be efforts at increased synergies between the guarantees to realize the state’s social, economic, environmental, and development goals.”
‘Basic income for unpaid household labour’
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Another study, Impact Assessment of the Five Guarantees of the Government of Karnataka, conducted by Lokniti-CSDS and Indus Action, recommended that the Government address the “flawed branding of the 5 Guarantees as ‘freebies’, rather than as social security and welfare”. Asking the Government to emphasise the impact of the scheme on financial savings, improved nutrition, health, education, mobility, and quality of life, it suggested positioning Gruha Lakshmi “as basic income for unpaid household labour, an entitlement, and not as patronage. Currently, some respondents feel ‘undeserving’ due to these pejoratives.”
Though they did not increase large-scale employability, employment, and economic growth, the guarantee schemes “do enable the seeking of better or new jobs and stemming of economic distress”, observing that the schemes, except the Yuva Nidhi, have powerful outreach and high saturation levels. It also recommended a grievance redress mechanism to address complaints of beneficiaries.
All the study reports were released Wednesday.