Jobs: Making Indian Youth Job Ready
The Union Budget focuses on maximising the employability potential of the country’s young population
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Modi government’s fourth annual Budget is packed with giveaways and several much needed programmes. It not only incentivised creation of new jobs in the formal sector, its renewed focus on infrastructure development, skill development, and the rural economy will now have a direct impact on job creation.
Every year, around 100 million youth seek jobs in the Indian job market. But according to the Labour Bureau of India, only 1.35 lakh jobs were created in 2015 and 4.93 lakh in 2014 across eight sectors.
A conducive environment to promote manufacturing in labour-intensive sectors is therefore the focus of Budget 2017. Besides, the new Budget aims to shift the focus from ‘job creation only’ to ‘creation of employment opportunities’ and ‘building employment capabilities.’ After all, the ‘number of jobs created’ is a lagging indicator, while creation of formal and informal enterprises and simultaneous focus on human capital development initiatives are lead indicators that bring long-term benefits to a country — both social and economic.
In the year ahead, despite the contraction caused by the recent demonetisation drive, the government is confident of a robust growth rate — on the back of a good monsoon and estimated increase in tax collections — which will give a fillip to manufacturing.
Finance Minister Arun Jaitley in Budget 2017 announced measures to leverage India’s “huge demographic advantage” and maximise the employability potential of the youth. He also announced a Rs 4,000-crore programme, Skill Acquisition and Knowledge Awareness for Livelihood Promotion Programme (SANKALP), which is aimed at providing market-relevant training to 3.5 crore youths across the country.
The FM described “energising youth through education, skills and jobs” as one of the government’s 10 important focus areas. He said the government proposes to extend Pradhan Mantri Kaushal Kendras to more than 600 districts across the country, from 60 districts at present. “The Budget has laid adequate focus on empowering youth through the Skill India mission; this shows a clear intent of creating skills infrastructure for both MSME and large industry segments,” says Jayant Krishna, executive director and chief operating officer, National Skill Development Corporation.
The government has also promised to establish 100 India International Skill Centres across the country to offer advanced training and courses in foreign languages, which Jaitley said, “will help our youth who seek job opportunities outside the country”. Plus, the next phase of skill strengthening for industrial value enhancement (STRIVE) will be launched in 2017-18 at a cost of Rs 2,200 crore.
A Reality Check
Just as the last three budgets, the latest too lays great focus on job creation, but little has changed on ground. According to the Labour Bureau 2016 report, about 77,000 jobs were created in July-September 2016, with key sectors such as manufacturing, construction and information technology showing a dip in job creation. The report says the government has been able to create only 1.5 lakh jobs in 2016 as against 1.35 lakh jobs in 2015, which was the lowest in seven years.
The latest demonetisation move further deteriorated the job scene. So to re-ignite growth, the Budget promised massive capital investments and infrastructure funding, in the hopes of better demand and more jobs.“The Budget is not inflationary. With investment focus on capital side than revenue, it means resources would flow towards productive areas and will give back dividends in terms of demand creation and employment generation,” says Anil Bharadwaj, Secretary General, FISME.
Overall, the Budget spells good news for the MSME sector, which was severely impacted by demonetisation. The government’s decision to reduce corporate tax rates from 30 per cent to 25 per cent for companies with an annual turnover of up to Rs 50 crore has been the highlight. “The incentives announced in MNREGA, rise in infrastructure will lead to job creation, but no major thrust on manufacturing and export businesses to create jobs,” says Piruz Khambatta, Chairman, Rasna India.
Time For Reforms
With global economy on a slow growth trajectory and a rising protectionist tendency in India, the scenario is not very encouraging for high growth in India. Jobs in the formal sector have been shrinking. The bulk of jobs in the last two decades came from the informal sector. But demonetisation and push for digital payments have put a spanner on the works there too. The latest Budget therefore focuses on sectors that have been most affected by demonetisation: farmers, rural markets, MSMEs and traders.
The FM also hinted at initiating reforms in labour laws to bring down the social security cost for MSME employers, and the Negotiable Instrument Act to address the menace of bouncing cheques.