India Explores Dual Approach: Job Scheme Boosts Hiring, Quasi-UBI Aims for Income Security

The Pradhan Mantri Viksit Bharat Rozgar Yojana (PM-VBRY) is introduced as a significant employment policy, providing a one-time grant of Rs 15,000 to first-time employees in the private sector. This incentive aims to lower hiring costs for companies and encourage job absorption.

However, current labour market indicators point to deeper structural issues. The Periodic Labour Force Survey shows overall unemployment at 5.1%, with significantly higher rates among youth in both urban (18%) and rural (13%) areas. India's labour force participation rate (56%) also lags behind comparable nations, risking a hysteresis effect where prolonged unemployment diminishes future employability for young individuals.

To address these vulnerabilities and safeguard the demographic dividend, the article suggests complementing employment schemes with an income security mechanism, like a quasi-universal basic income (quasi-UBI). This would act as a stabilising force against economic disruptions from automation, climate change, and global shifts.

The discussion contrasts in-kind subsidies, which can be inefficient and prone to leakages, with cash transfers. Cash transfers offer flexibility, reduce transaction costs, and stimulate demand, as seen during the COVID-19 pandemic with the Pradhan Mantri Garib Kalyan Yojana.

While a full UBI is fiscally prohibitive for India, a quasi-UBI is proposed as a practical alternative. It would target vulnerable groups and provide income cushions. The JAM trinity (Jan Dhan, Aadhaar, Mobile) infrastructure can ensure efficient delivery of such transfers.

Impact: This news suggests a proactive government approach to employment and economic stability. Successful implementation of PM-VBRY could boost hiring by SMEs, while a potential quasi-UBI could increase consumer spending power, benefiting various sectors. However, fiscal sustainability and the design of the quasi-UBI are crucial. Businesses might see reduced labour acquisition costs and potentially increased demand. The focus on digital infrastructure for transfers also encourages financial inclusion. Rating: 7/10

Difficult terms: Hysteresis effect: A phenomenon in economics where prolonged unemployment, especially among youth, can permanently reduce their future earning potential and employability. Labour force participation rate: The percentage of the working-age population that is either employed or actively seeking employment. Quasi-universal basic income (quasi-UBI): A proposed social welfare system that provides a basic income to a broad segment of the population, but not necessarily every single individual, often targeted at those most vulnerable or in need. In-kind subsidies: Government assistance provided in the form of goods or services rather than cash, such as food rations or housing support. Cash transfers: Direct payments of money from the government to individuals or households. Marginal propensity to consume: The proportion of an additional unit of income that is spent on consumption. JAM trinity: The combination of Jan Dhan (financial inclusion accounts), Aadhaar (biometric digital identity), and Mobile (phone connectivity), used by the Indian government to facilitate direct benefit transfers efficiently. Direct benefit transfers (DBT): A system of transferring government subsidies and benefits directly to the bank accounts of beneficiaries.