Budget focus on jobs welcome
The Union Budget 2024-25 marks the launch of the Modi 3.0 government’s economic policies and reflects its political compulsions and the grassroots realities of India’s jobs crisis. The increased allocations to Andhra Pradesh and Bihar are rewards given to political partners without whose support the government will not exist. The focus on jobs is sharp, underscoring how the government views employment generation both as an economic necessity and a political challenge.
Unemployment has dogged the Indian economic landscape for years. It was made worse by demonetisation and the Covid-19 pandemic. The hope that employment will pick up as the economy fires has been belied again and again, giving us the incongruity of a heated stock market celebrating new highs even as the jobs crisis got more entrenched. Will the provisions in the budget be able to fix this? That question will not be answered in a hurry but it at least puts the issue of creating jobs in sharp focus.
Recognition of the problem is the first step to addressing it. At this stage, it is safe to say that the challenge of creating meaningful, decent jobs in the short haul has been taken up. To that extent, the political conversation has shifted, with the understanding that India runs the risk of a promised demographic dividend becoming a certain demographic disaster. Skilling and incentives help, but at the end of the day, jobs cannot come without new investments and a revival of the ‘animal spirits’. The budget has proposed that a market-based financing framework will be brought out. However, given the reluctance of the private sector to support infrastructure investment, it is doubtful if this proposal will work.
At the other end, human capital cannot grow with band-aid fixes. The education system is not oriented to making the youth of today ready for the jobs of tomorrow. This requires a longer-term focus on education and health and huge government investments.
The critical aspect of the budget is fiscal consolidation in terms of deficit reduction and public debt reduction. The revenue deficit reduction is to the tune of 0.8 per cent of GDP which is on account of significant increase in non-tax revenue to the extent of 35.78 per cent. This is primarily because of the huge surplus transfer from RBI, resulting in an increase of 69.6% in the dividends and profits. With such an increase, the share of this item has gone up to 53 per cent of the total non-tax revenue as compared with 42.4 per cent in 2023-24. The reduction in revenue deficit has resulted in a reduction in fiscal deficit. The gross tax revenue for 2024-25 is projected to grow at 11.7 per cent as against 10.8 per cent in 2023-24. Thus, the tax buoyancy (reflecting the responsiveness of changes in economic growth to changes in tax collection) is budgeted at 1.1 per cent, which is not very encouraging.
Union Budget 2024 LIVE | Making a record for any Finance Minister, Nirmala Sitharaman presented her 7th consecutive Union Budget on July 23, 2024 under the Modi 3.0 government. This Budget brought tax relief for the middle class, while focusing on jobs through skilling, incentivising employers. Track the latest coverage, live news, in-depth opinions, and analysis only on Deccan Herald. Also follow us on WhatsApp, LinkedIn, X, Facebook, YouTube, and Instagram.