Should government provide Unemployment allowance to unemployed young people?

I don’t think that allowances should be provided to unemployed people in a developing country like India. But answering the question with a simple yes or no is not easy. I would like to discuss pros and cons of both the aspects of the situation before coming to any conclusion.

Undoubtedly, Employment is a guaranteed under a right in India. If government is unable to fulfill its legal obligations under this act then it has to provide unemployment allowance. It can also be seen as an instrument of ensuring socio economic justice but this doesn’t mean everyone is entitled to it .This could be confined to the marginalized sections and minority groups like transgender etc who face severe discrimination .Also, it should depend on the economic status of unemployed person’s family. Other alternatives could be to impart skills with stipend so that both the economy and citizens benefit.

On the other hand, in a country like India with 1.32 billion population(most of which is unemployed in informal sector)an Act for unemployment allowance seems infeasible. But I think that skilling along with creating equivalent number of jobs is the logical way forward. Instead of providing employment allowances to unemployed, government can play an important role in creating a pool of employment opportunities. Though it is easier said than done .Also, in my opinion, unemployment allowance turns people lousy. It has been experienced in many European countries wherein people choose not to work and survive on allowance. I think that the solution is not practical for a country like India where population is burgeoning every year. Perhaps, this can be a good idea for rich countries with less population. If we start giving unemployment allowance India will be in debt within a few months. This is a good idea for rich countries with less population.

But the situation needs to be seen holistically. Unemployment allowance at the same time, is necessary as everyone including unemployed people have to feed their family. If you don’t give them allowance, they will find some other ways to make money be it legal or illegal. Government should know that a kid whose belly has swollen from hunger doesn’t care about their daddy’s work ethics. Here, the average daily worker is exploited to his last shred. Unemployment allowance seems like a good idea at such a time. It probably isn’t the best strategy for the long run ,but, till the time we don’t make better people, this seems to be the only way out. Though government has ESI scheme where unemployed persons can get some benefits. The ESI scheme introduced a limited version of unemployment insurance in 2005.The benefits were upgraded a bit later. Essentially, an insured person can get 50% of ones salary for upto 12 months or re employment, whichever is earlier.

But the question arises Where will the government pay for the allowances? We have barely been able to replenish our fiscal reserves this year .Allowances is not the way to go for a country like ours. Socialist countries like Venezuela have failed badly .It has oil reserves bigger than Saudi Arabia but socialism has taken a toll on its health, there inflation is more than 700%.I am not against the allowances if they work for a short term but the issue is that we don’t have enough reserves to scale up to the magnitude of people who are below the poverty line in our country. For a developing country, spearheading schemes through sovereign debt is very difficult. Just because india’s sovereign debt with respect to developed economies is low doesn’t mean that India is at convenience to take this route.

An outright yes or no, in my opinion, doesn’t provide a logical solution to the question asked.We must use a middle path,carefully tread,so that economy remains out of trouble and welfare also happens amidst diverse population.

Article by Vagisha Arora