The impact that the increasing number of social grants may have on unemployment rate
Answers
Social grants are very popular in India. During the elections time almost every political party announce social grants based on cast, religion, employment status, age etc. For the last several years, people also electing parties who give more such grants. Whether political parties full fill the promises or not, but it has become a trend. Let us discuss about pros and Cons.
Due to these social grants many people (including young people) are reluctant to find better work and improve income methods. This mainly effecting agriculture sector and service sector. Farmers are not able to find labour at a reasonable price so that they can produce the food at a profitable cost. The price at which farmers sell products to middle are very low that they are not able to sustain. This has a very serious impact on our grocery and food. People are spending more on grocery.
It is the same case in service industry. It is getting difficult to employ a person for office cleaning, house cleaning, small electrical work or any other service. This is clearly visible in villages and small towns. It is very costly to get service done.
You can apply many such things in all the social grants. It may more inert society, if it goes at this rate.
At the same time, I do not say all the social grants are bad. There are some very good things. Like Government Health policies at a lower cost, it benefits both people and health sector. Old age pension, it benefits lot of people, Agriculture investment for small farmers, grants for startups.
It should be thought very wisely before rolling out any social grant.
Social grants are given in a developing economy for the welfare of the small, backward and marginal groups. The positive impacts of such social grants are-
1) Social grants in form of food subsidy, LPG subsidy, cash grant help the poor come out of their poverty and help them sustain basic life requirements.
2) With basic requirement of food is fulfilled, a person can think to go out and work and earn money, and hence leads to the development of his/her family. This leads to more employment and reduces the employment rates.
3) Free education grant , especially for poor children enable them to get educated and work to earn money. Hence, unemployment is reduced.
The negative effects of social grants on unemployment -
1) Free food and fuel, can actually increase unemployment in some cases. This is because free food and fuel fulfill the survival requirements of a family.
2) When people get subsidy, they may not use it constructively and waste that money, thus bring the effect of social grant to nil.
3) Such grants inculcate the habit of sitting and eating at home, and does not force a person to work.