Bengaluru: Karnataka’s labour workforce engaged in jobs across rural areas fell from 63.1 percent in 2022 to 55.1 percent in 2024, a government-commissioned study has found, sparking debate on possible consequences of the state’s flagship Yuva Nidhi unemployment allowance scheme.
The study, conducted earlier this year by Mumbai-based XKDR Forum, said labour force participation rate (PLFR) fell across Karnataka, but the decline was sharper in rural areas of the state.
For diploma and graduate-degree holders, the study said, LFPR in Karnataka declined from 65.9 percent in 2022, when Yuva Nidhi was not in effect, to 63.6 percent after it was implemented.
“The labour force participation rate in Karnataka for diploma and graduate degree holders is seeing a slight decline from the pre-scheme period. This trend varies across HRs (homogenous regions) and rural-urban regions, with rural (areas) especially deviating much lower than the state average,” the study, released this month, said.
In urban areas, this figure saw a marginal decline from 66.3 percent to 65.3 percent over the same timeframe.
Yuva Nidhi, one of the five poll promises implemented by the Congress government, provides unemployment allowance of Rs 3,000 per month to graduates and Rs 1,500 per month for diploma holders for a maximum of two years. Though it was announced in July 2023, disbursements began in January 2024.
The state government maintains that findings of the XKDR study, which analysed PLFR till end of 2024, were calculated too early to draw conclusions about Yuva Nidhi’s impact.
The labour minister did not respond to requests for comment till Monday afternoon.
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The five guarantees
The Congress’s five guarantees—Anna Bhagya (free rice), Gruha Jyothi (free electricity), Gruha Lakshmi (Rs 2,000 for women heads of households), Shakthi (free bus rides for women) and Yuva Nidhi—are considered key to the party’s victory in the 2023 Karnataka assembly election.
The Siddaramaiah-led government regularly emphasises the schemes’ success in strengthening the state’s social and economic fabric.
“The Bhagya schemes introduced in the (my) first term as CM and the guarantees implemented in the second term have been extended to the poor from all caste groups. My goal is to build a society that is inclusive for all and progress for all,” Siddaramaiah said at an event on Wednesday.
The study’s findings come at a time Siddaramaiah approaches the halfway mark of his term—when his deputy D.K. Shivakumar was to assume leadership, party sources told ThePrint citing Congress’s “unwritten agreement” to quell its internal power tussle.
But opposition parties contend that the schemes are the main cause of Karnataka’s fiscal distress, and this leadership clash within the government had brought development to a standstill.
Rajya Sabha MP and BJP leader Lahar Singh Siroya last month alleged in an X post that the state had no money to pay compensation to rain-hit districts because of “empty coffers due to guarantees”.
Data from the Karnataka government shows the state has spent approximately Rs 1 lakh crore on implementing the five schemes since early last year. Capital inflows also diminished as taxes reduced under the new GST regime, adding to the state’s economic woes.
Karnataka CM Siddaramaiah, while presenting the 2025-26 budget in March, had said the state will borrow Rs 1.16 lakh crore this year, against Rs 1,05,246 crore last year, an increase of over 10 percent. This jump in borrowings shifted the state’s total liabilities by 15 percent, from Rs 6,65,095 crore last fiscal year to Rs 7,64,665 crore.
A mixed bag
Dwelling into the impact of all five schemes, the XKDR study noted an increase in money transfers from the government to households—from a mere 9.3 percent in 2022 to 72.2 percent in 2024—indicating that the initiatives were reaching its intended beneficiaries.
Expectedly, as money transfers went up, so did monthly household income (Rs 22,100 in 2022 to Rs 27,080 in 2024) and expenditures (Rs 13,856 to Rs 14,329), the study found.
Another improvement was observed in the percentage of households with at least one graduate or diploma holder—from 27.5 percent in 2022 to 31 percent in 2024.
Still, more and more youngsters have sought work under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). Another state-commissioned study, ‘Performance Analysis of MGNREGA in Karnataka’ in 2024, found number of households that availed employment under MGNREGA went from 10.93 lakh to 30.02 lakh between 2014-15 and 2023–24—an average annual growth rate of 11.87 percent.
The demand for MGNREGA also prompted Karnataka’s Rural Development and Panchayat Raj Minister Priyank Kharge to request the central government earlier this year to increase the scheme’s person-day limit from 100 to 150 days annually.
Others expressed concerns about regional disparities in development.
Bharmagouda (Raju) Kage, a senior Congress MLA and close aide of Siddaramaiah, this week wrote to the CM, Prime Minister Narendra Modi, President Droupadi Murmu and Karnataka Governor Thawarchand Gehlot, demanding statehood for 15 districts of north Karnataka.
The main reason for this difference in regional disparities, experts say, is that most investments and infrastructure developments tend to be concentrated in and around Bengaluru, forcing many to migrate to villages.
Narendar Pani, JRD Tata Chair at the National Institute of Advanced Studies (NIAS), emphasised the need for policies to convert household savings into lasting progress.
“The (government’s) guarantees need to be evaluated in a dynamic sense. There is a process of growth and development taking place. One of the constraints that you find in Karnataka is that they are not able to turn rural capital into industrial capital like that has happened in Tamil Nadu. If the guarantees have led to increased savings, there is an opportunity to tap into if one can develop the right institutions,” Pani said.
(Edited by Prerna Madan)
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