Analysis of Karnataka's 5 Guarantees - A Short Term Win
Premise --
The Indian National Congress Party, came into power in Karnataka riding on the promise of its' 5 Guarantees. Named as Annabhagya(additional 5 Kgs of free PDS rice), Gruhalakshmi(Rs. 2000/month to female head of households under BPL/APL), Gruhajyoti(upto 200 units of free power), Shakti(free bus ridership for women) and Yuvanidhi(unemployment dole for young graduates), these schemes promised veritable cash savings for all classes, especially women. The schemes were promptly rolled out after the election victory and the government has spent upto X crores to advertise their victory in fulfilling their promises. But has it been a victory for citizens of the state? As two and half year roll by, and nearly 50,000 crores are budgeted for 2025-26 on this scheme, it is necessary that citizens of the state reflect on the impact of these guarantee schemes
Middle class perception --
Among the upper middle classes and upper classes of the city, especially the capital city, the perception is wholly negative. Often described as 'Freebies', these schemes are seen today as bribes given to voters, as the taxpayers money being distributed rather than utilized for state building and service delivery. There also perceptions that this free money makes the lower classes lazy and unwilling to work.
It is noteworthy to pointout however, that Gurhajyoti today has X number of beneficiaries, whereas the state's BPL and AAY population is only Y. This indicates that the negative perception among the middle and upper classes has not hindered their uptake of these 'freebie' schemes.{fill in x and y}
Generic beneficiaries perception --
The state government's Fiscal Policy Institute(FPI) commissioned a study of the 5 Guarantees, sponsored by the Azim Premji Foundation(APF). A survey was conducted by the renowned Centre for Study of Developing Societies (CSDS) to understand the perception about the impact of the guarantees among female beneficiaries, who were mostly BPL/AAY.
Annabhagya - good upgrade towards nutrition
The survey revealed that 88% families were now either having more meals or more quantity in each meal, as a result of Annabhagya. This is good news and the government's recent announcement to replace the additional 5 kgs of rice with a basket of items including 1kg each of tur dal, moong dal, sugar and salt, besides 1 liter of cooking oil, sounds good on paper, aimed at expanding nutrition and comfort. Quality procurement will be an important challenge here.
Gruhalakshmi -
CSDS's survey revealed that 88% respondents perceived an improvement in decision making capacity in the family. 95% respondents perceived that the scheme has helped with financial upliftment. These are undoubtedly great outcomes.
The FPI in a report identified 4 objectives for Gruhalakshmi, which were empowering women, poverty reduction, gender equality and socio-economic development. The survey results would suggest that the scheme has been successful in achieving women's empowerment and progress in poverty reduction.
Global research so far suggests that unconditional transfers are known to work well in achieving poverty reduction and transfers to women are safer. The survey also corroborates this. 94%, 89% and 52% of the beneficiaries have been buying more food items, spending on medical expenses and on education.
However, economic research has also revealed more concerning insights. Unconditional transfer mostly don't have an impact on men when it comes to seeking employment (i.e., it freebies don't make men lazy), but they have been linked with[numbers] reduced female labor force participation among women and a return to household work, which is not a great outcome in terms of empowerment and gender equality. It is also known that once the transfer ends, many of the gains in women's empowerment taper off [source or numbers].
So while the scheme has led to perceived gains in empowerment and poverty alleviation, transfers are not a sustainable responses to need for socio-economic development and gender equality. Policies that can bring more women to participate in the formal workforce and earn a living would achieve much more. [any evidence from other states in India?] It is also worth noting that Gruhalakshmi is the most expensive amongst the 5 guarantees.
GruhaJyoti -
As per the government's FPI, the objective of Gruhajyoti is to reduce financial burden on residents and promote energy conservation. Evidence of financial upliftment is clear from the CSDS survey, with 87% respondents perceiving financial gains and 74% saving up to Rs. 500.
However when it comes to energy conservation, this behavior depends a lot on the expectation that a reduction in consumption would immediately lead to falling under the subsidy. This is where the government's performance has been miserable. The government has been slow to update the list of subsidy beneficiaries, with citizens reporting that despite an year of reduced consumption, they haven't been receiving the subsidy[confirm and cite].
Moreover, 200 units is a lot of power and lot of well to do citizens are availing this scheme despite no real need. Why should the government subsidize 200 units of private power consumption for the upper classes? If it must subsidize, the objective must be to improve the quality of lives of the poorest. In this regard, the scheme's design is also flawed. The scheme locks in people's consumption at the last one year's average, and charges consumers for any deviation from that average beyond 10%. If a consumer was consuming 200 units earlier, he/she can continue to consume all 200 units for free, whereas, if a poor family was consuming only 30/40 units, they cannot increase their consumption beyond 45/50 if they want to enjoy free power.
This is poor design and neither helps reduce consumption among the richer and improve consumption among the poorer. Marred by poor design, slow beneficiary updates, this scheme doesn't aim to achieve anything expect generate some saving for power consumers. [What has been the impact in Delhi/other states?] It is worth noting that is the second most expensive scheme, budgeted at 10,100 crores this year.
Shakti -
The Shakti scheme has also received a stamp of approval from citizens, with 52% of respondents saving up to Rs. 500, as per the survey. According to this survey, 14% have started traveling a lot and 19% moved to a better job or took up a new job after availing the scheme. These are great outcomes, not just in terms of financial benefits, but in how this increased movement can enable women's participation in the economy, society and politics of the state. With the increased movement, public safety in buses(which are notoriously sites of women's harassment) and public spaces has increased, which is a positive shift. [Any other Evidence from other states?].
The government needs to improve public lighting, quality of bus stands, footpaths, last mile connectivity and frequency of buses to amplify the benefits.
Yuvanidhi -
This scheme is the last and has received the least attention from the state. Aimed at providing financial assistance to unemployed but education individuals, it has only managed to achieve 2.5L beneficiaries.
Can we find the total unemployment rate and graduate unemployment in Karnataka. It is worth noting that the scheme only provides assistance for 2 years after graduation if the graduate doesn't get a job.
Financial assistance and upliftment is the running theme of the 5 guarantees, but if the assistance is targeted to young individuals/citizens, it must provide them something more. Unconditional transfers are good interventions in conditions of immense poverty, but the state's youth must be promised something more. They are looking for a jobs that will assure an income or a livelihood to support a decent quality of life, start a family and provide opportunities for growth. How can 3000 rupees per month after graduation, achieve anything? Typically students who leave college without a job in hand are either preparing for government jobs or a masters course and this amount may help cover for mess fees in a hostel or PG in a city, but nothing more. This money falls short of being a protection, as it doesn't even cover half a month's rent at a PG or hostel in Bengaluru. If this money cannot provide protection, doesn't incentivize skilling, doesn't lead to any social productive activity, than what is it?
[Any international experiences with unemployment doles]
The Need for Welfare in A lopsided development model
This critique is not to deny welfare support to the citizens of Karnataka. While India and Karnataka have witnessed gains in poverty reduction over the last few decades [insert some data point], Indians are still vulnerable to poverty. A World study revealed that 50% Indians are one income/expenditure shock away from poverty[clarify]. This means that Indians need a safety net, some form of economic protection and support to prevent destitution, by ensuring universal access to food, medicines, education and basic income. [some research on global welfare models]
But why are we witnessing destitution and vulnerability in 2025? As renowned economist Rathin Roy has recently argued, growth in India has been unequalising because the top 10 per cent have benefitted disproportionally more from it than the bottom 90. In addition, growth has been unequalising across regions and ethnicities
Developmental state to Compensatory State
It is in this context that these 5 guarantees must be understood. Political leaders and citizens recognize the political economy of elections, its short-termism and the lack of capacity or motivation to reform public delivery systems. Again borrowing from Rathin Roy, some of the guarantee schemes are a compensation, wherein money is directly put into the pockets of citizens to compensate them for the fact that economic growth has not done so, and that the State has also failed in its mission to deliver public and merit goods to those who cannot afford to procure these from the market.
This is also why schemes like the 5 guarantees have been floated across states in India, be it the BJP or the Congress and parties are reluctant to oppose the incumbents on these schemes.
From Rights-bearing citizens to beneficiaries
As Yamini Aiyer has recently argued, welfare is reframing itself as a gift offered by the party leader, almost as an exchange of loyalty rather than a fundamental right that ought to frame the terms of the social contract between citizens and state. The riddance of rights based language has destroyed the legitimacy of welfare mechanisms in the eyes of tax payers.
A rights based approach grounded in social welfare language of democracy also provided a logical framework to design welfare schemes. Provision of free private goods like electricity are not citizens' rights, but ensuring social protection, good quality public health & education and minimum wages are.
Fiscal profligacy and long-term lock-in
These guarantee schemes must also be viewed in context of the state's financial situation. The state government has entered a phase of revenue deficit since the beginning of the guarantee scheme, with revenue deficit budgeted at 19,262 Crores(0.6% of GSDP) & fiscal deficit at estimated at ₹90,428 Crores (2.95% of GSDP).
Given that the revenue deficit has exceeded FRBM limits and the fiscal deficit is just touching the 3% limit, the state’s finances currently do not support large social welfare schemes. That is not to suggest that only these guarantees are to blame for this fiscal situation, as there are other forms of subsidies as well (energy subsidies, corporate tax rebates), it does suggest that unless more resources are mobilized, the government is currently borrowing with interest to sustain these guarantees.
It is also worth noting that these allocations are practically untouchable and any future incumbent will be risking too much to undo these. Delhi and Andhra Pradesh are examples of how these fiscal commitment legacies are hard to undo.
A short-term win, a long term loss
Going back to the question of whether the guarantee schemes are a moment of victory for the citizens of state. We would argue that they are, but not because citizens have demonstrated any virtue in voting in the Congress party. It is the logic of electoral democracy, that has forced political parties, across states including Karnataka, to offer cash transfers and subsidies. In a political economy that is of, by and for the rich, only the polling booth gives the nation's poor a fighting chance.
However, in the long run, these guarantee schemes are only addressing the symptom, not the cause. Unemployment was cited as the biggest issue in the CSDS's 2023 Karnataka assembly elections' post-poll survey. The reason for this is an education system that is not delivering. As per ASER's 2024 survey, only 62% (2/3rd) students in Std VIII in Karnataka can read a Std 3 level text and only 37.9% (2/5th) students in Std VIII in Karnataka can do division. Karnataka today lags behind so-called "BIMARU" states like UP and Bihar on both these metrics. Moreover, none of Karnataka's state public universities features in the top 100 educational institutions in India in 2025, as per the central government's NIRF Rankings. And yet, in the face of this Karnataka spends less than the national average on education, by more than 4% of GSDP. It also spends less than the national average on public health and rural development.
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