The Shakti scheme of free bus travel for women is contributing to Karnataka’s GST collection while also increasing female participation in the labour force, according to a study by the state-run Fiscal Policy Institute (FPI).
From June last year, when the Shakti scheme was launched, to March this year, Karnataka’s GST collection 'presumably' increased by Rs 309.64 crore as the money women are saving is being used for consumption activities, translating into revenue for the government, the study said.
This is the first study that quantifies the financial impact of Shakti, the Siddaramaiah-led Congress government’s flagship guarantee scheme.
“The amount saved on the travel results in increased income for a traveler and it is presumed that they will spend the entire amount on consumption of other necessary items,” FPI research fellow Anusha Sangondimath states in her report. “Such extra spending would modify the tax collections by the government.”
The study calculates the fiscal impact of Shakti by using data of Monthly Per Capita Expenditure on various commodities, the GST rates and the total ticket value of the scheme. Using the same method, the study projects that Shakti can generate GST revenue of Rs 371.57 crore in 2024-25.
In another study done by JustJobs Network in collaboration with the Fiscal Policy Institute, the average savings due to the fare-free travel under the Shakti scheme is shown as Rs 1,326 in Bengaluru, Rs 1,015 in Haveri, Rs 779 in Chamarajanagar, Rs 784 in Yadgir and Rs 681 in Udupi.
Women in employment
According to the FPI study, the Shakti scheme is contributing to more women taking part in employment activities.
The study uses quarterly comparison of Female Labor Force Participation Rate (LFPR) and Worker Population Rate (WPR) before and after implementation of the Shakti scheme.
In October-December 2022, the female LFPR was 25.1, which rose to 30.2 in the same period of 2023. The WPR in October-December 2022 was 23.7, which went up to 28.8 in 2023, the study states.
“Safe and affordable modes of transportation can not only increase female participation in the labour force but also provide them with an opportunity to actively contribute to the nation’s economy,” the study states.