Impatience with jobs: On the Budget speech
Union Budget’s stress on employment is good; a lot more needs to be done
One of the biggest pivots in this Budget speech has been a shift in the stance on employment and the sharply higher frequency of mentions it received. ‘Employment’ was the central theme of the Budget, that placed the Prime Minister’s package to facilitate jobs and skills on top of its list of soothing promises. The proposed ₹2 lakh crore package seeks to help 4.1 crore youth over five years with three employment linked-incentive schemes — two of which encourage hiring of fresh entrants in the job market for at least one year with subsidies, while a third attempts to incentivise companies to scale up hiring beyond their previous year’s worker count. To bridge the gap between skill sets and available job roles, a spruce-up of 1,000 industrial training institutes with courses designed in tandem with industry has been promised, along with an ambitious internship programme for a crore youth in 500 top companies. The details of this intern placement programme will be fleshed out, but the Centre has promised to bear a bulk of the stipend involved. Firms can join the scheme on a voluntary basis and tap their mandatory corporate social responsibility funds for the remaining costs. The primacy assigned to tackling the jobs crisis, that the Opposition sought to highlight in the electoral battle, marks an acknowledgement of an issue that the government has otherwise sought to paper over.
To be clear, critiques of jobless growth are not unique to this government — even the UPA had faced similar barbs. Part of the problem has been investors’ preference for capital-intensive investments, not in the least because India’s labour laws are yet to catch up with the rest of the liberalised economy, acting as a disincentive against creating larger units with more hands on deck. The distress in recent years has perhaps been more acute, as the informal sector that accounts for a bulk of India’s jobs also took a hit from successive shocks such as demonetisation, the GST rollout and COVID-19 pandemic lockdowns. Plans to spur private investments through incentives have focused on production levels rather than new jobs. With even rating majors terming India’s high youth unemployment as a structural threat to its long-term growth potential, the results of this package of good intent that officials believe can nudge hiring plans at the margins, will be watched. But for the broader employment outlook to pick up, the government must do more, including filling lakhs of vacancies in its own ranks expeditiously. Fostering conditions to boost consumption is most critical, as the private sector shall neither feel the need to expand capacity, nor hire more people without that trigger just to avail a subsidy.