Budget 2019 has indirect tools for job creation

The 2019-20 budget presented by Finance Minister Nirmala Sitharaman had a few indirect tools to deal with the looming job crisis in India, although it focused directly on key areas like agriculture, education, and health.

India has seen a consistent decline in the Labour Force Participation Rate (LFPR) since the last decade. The LFPR signifies the percentage of the working-age population (15 years and above) currently working or looking for work. In the last decade, the LFPR has declined by around five per cent from 56.6 to 51.9 per cent from 2007 to 2018. As per 2017 data, India ranked at 148 out of 180 countries, based on the LFPR. The numbers, thereby, signify the lack of job opportunities that have led to a decline in the number of people engaged in the workforce. Keeping in mind the six per cent unemployment rate as published by NSSO data early this year, the declining LFPR only raises the need for government intervention in order to promote employment in the country.

Going by the Economic Survey the government seems to have taken a new approach towards job creation. The Survey released on July 4, 2019 claimed that “job creation can indeed be fostered by encouraging investment”. The budget presented the next day took the premise forward by focusing on increasing investment and access to low-cost capital, rather than talking about job creation categorically.

However, the current government has taken three major steps that can boost job creation in the coming years – first, providing appropriate skills, second, increasing the scope for investment and access to credit, and finally, generating opportunities through economic hubs.

As per the FM, the government has already been enabling about 10 million youth to take up industry-relevant skill training through the Pradhan Mantri Kaushal Vikas Yojana (PMKVY), a scheme designed to provide short-term training to one crore persons from 2016 to 2020. The spending on PMKVY has declined by Rs 215 crore from Rs 3141 crore in 2018-19 to Rs 2926 crore in 2019-20.

This year, however, the government has altered its allocation by spending money on new schemes like National Apprenticeship Promotion Scheme, strengthening of infrastructure for institutional training, and strengthening of skill institutions like National Instructional Media Institute, etc. They have also increased focus on skill sets that can help access jobs abroad, and new-age skills like Artificial Intelligence (AI), Internet of Things, Big Data, 3D Printing, Virtual Reality, and Robotics.

Other than skilling, the current budget has hit the right note by creating scope for increased investments in the country. They have taken it a step further by realising that “investment-driven growth requires access to low-cost capital”. Right from micro, small and medium enterprises to railway Infrastructure, FM acknowledged the need for investment and credit access to boost the economy. For instance, the Rs 70,000 cr allocated to Public Sector Bank and 1 crore for MSMEs within 59 minutes are significant steps to create the impetus for macro-level growth and create new job opportunities. Keeping the declining female LFPR in mind, the easy access to finance for women covered under the Self Help Group movement is certainly a positive move for the workforce.

Finally, by promoting programmes like ‘Study in India’ and developing Tourism Sites, the government has made the first move towards creating new economic and urban hubs in the country. Urbanisation would help create new jobs and is estimated to contribute towards 70-75 per cent of India’s GDP by 2020. The largest number of jobs in 2016 was created by the eight major cities in India. Hence, it is about time that we correctly see “rapid urbanisation of India as an opportunity rather than a challenge”. We need to create 20 million jobs per year to cater to the unemployed population and the 13 million people entering the workforce every year. Hence, the Rs 65 crore outlay on Study in India and Rs 1106 crore on Development of Tourist Circuits are much-required investments towards job creation.

Having won with a large mandate, the government owed it to the citizens to provide strong steps to solve the jobs crisis in India. By taking steps to ease the flow of investment and streamlining multiple labour laws into a set of four labour codes, the government has shown its intent. Therefore, even though the budget does not strike at the issue directly, it does have few strong steps that would help India deal with the falling LFPR and the 13 million entering the workforce every year.

(The writer is a policy analyst on livelihood challenges, urban governance, and public finance)

The views expressed above are the author’s own. They do not necessarily reflect the views of DH.