Labour force participation declining after Yuva Nidhi scheme: Study

Bengaluru: Karnataka has witnessed "a slight decline" in the labour force participation rate (LFPR) among graduates and diploma holders after the government started paying unemployment allowance under the Yuva Nidhi scheme, a study has found. 

The study was done by Mumbai-based research group XKDR Forum, covering over 12,000 respondents across 29 districts as part of an assessment of the Congress government's five ‘guarantee’ schemes.

Under Yuva Nidhi, which is Congress leader Rahul Gandhi's pet scheme, the government pays Rs 3,000 a month to graduates and Rs 1,500 to diploma holders who are unemployed for 180 days or more upon completion of their degree. Allowance is paid up to two years or till the beneficiary gets a job, whichever is earlier. 

Payments to 2.84 lakh beneficiaries started in January 2024. 

There are 31% households in Karnataka who have at least one diploma holder or graduate.  

In 2022, the LFPR in Karnataka was 65.9%. This dropped slightly to 65% in 2023. In 2024, it was 63.6%. 

"The LFPR in Karnataka for diploma and graduate degree holders is seeing a slight decline from the pre-scheme period," the study report said. "This trend varies across [regions], with rural especially deviating much lower than the state average."

The rural labour force participation in 2022 was 63.1%, which dropped to 55.1% in 2024. Similarly, in urban areas, it was 66.3% in 2022, which reduced to 65.3% last year. 

Labour force participation rose in Bengaluru Urban, Bengaluru Rural, Chikballapur, Kolar and Ramangara from 63.4% in 2022 to 67.6% in 2024. 

LFPR has fallen in all other districts. The steepest fall was in a cohort comprising Belagavi, Davangere, Dharwad, Gadag, Haveri and Shivamogga -- from 67.4% to 58.5%. 

However, the study said early trends "disprove" the hypothesis that unemployment allowance lowers the incentive for graduates or diploma holders to find work, adding that there was a decline in LFPR in Maharashtra, Goa, Telangana, Andhra Pradesh, Tamil Nadu and Kerala "while it was stable for Karnataka". 

Skill Development Minister Dr Sharan Prakash Patil said "no beneficiary is sitting at home doing nothing because of the allowance".

"Beneficiaries are not attending job fairs thinking the allowance will stop if they undergo training," Patil said. "I want to make it clear that it won't stop unless they get a job."