Onus Now On ‘Wealth Creators’
In tackling the tricky issue of generating jobs, the Finance Minister has passed the baton on to the ‘wealth creators’
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The demand for jobs was probably the most strident of all the pleas made to the Narendra Modi-led National Democratic Alliance (NDA) government over the last five years. The very demographic dividend that India prides itself on – the vast population of youth – also stare at a future where jobs are scarce. Centre for Monitoring Indian Economy (CMIE) data pegs unemployment at 7.8 per cent, with urban India much the worse for wear at a scary 8.2 per cent unemployment rate. Joblessness in rural India is close behind at 7.6 per cent.
In the run-up to the Union Budget, BW Businessworld picked the minds of economists and decision-makers on the jobs crisis. Ajit Ranade, President and Chief Economist, Aditya Birla Group, summed up the views of a myriad voices when he said, “The economy is not creating adequate jobs, and that is a big concern. We need more than 10 million new jobs to be created every year for many years to come. That means we also need to create more than one lakh new enterprises every year. That puts the focus on ease of creating, doing and closing business. This should be a big policy focus.”
Ranade felt that India should “particularly focus on labour intensive sectors, both in manufacturing and services”, like textiles, construction, agriculture and agro-processing and tourism. He counted the health sector among those that held potentials for jobs growth. He emphasised the importance of skilling and training to prepare the potential workforce for “jobs in the future”, as droves of jobs in manufacturing may be eliminated through automation and robotics.
Union Finance Minister Nirmala Sitharaman seems to have had her ears to the ground, for she has nabbed the jobs dilemma by the tail. Instead of attempting to create vacancies in government, she has incentivised investment in industry, so that it may in turn create employment. “Our job creators are our wealth creators,” she announced in her Budget speech and proceeded to shower manna on investors of potentially labour-intensive ventures like startups and medium and small enterprises (MSMEs). Sitharaman focused on increasing investment in infrastructure and relaxed norms for foreign direct investment (FDI) in media, aviation, insurance and single-brand retail.
The Finance Minister offered tax benefits for affordable housing and for agricultural infrastructure. She provided incentives for electric vehicles and simplified procedures for angel tax for startups by absolving funds raised by them from requiring scrutiny by the Income Tax Department. In short, she snipped at quite a bit of red tape to lure investors into both manufacturing and services.
Small and medium enterprises which are usually labour-intensive in India, were particularly in focus. The Scheme of Fund for Upgradation and Regeneration of Traditional Industries (SFURTI) will, for instance, set up new clusters in the year ahead to enable 50,000 artisans to join the economic value chain.
Sitharaman assured the House that the Skill India initiative would focus on new-age technologies such as AI (artificial Intelligence) and IoT (Internet of Things) to equip youth with essential skills and make them industry ready.
India’s very first woman finance minister then made special provisions for women-driven ventures in the small-scale sector. “This government has supported and encouraged women entrepreneurship,” she said, adding “In order to further encourage women enterprise, I propose to expand the Women SHG interest subvention programme to all districts. Furthermore, for every verified women SHG member having a Jan Dhan Bank Account, an overdraft of 5,000 shall be allowed. One woman in every SHG will also be made eligible for a loan up to 1 lakh under the MUDRA Scheme.”
The measures found resonance within industry. “The Infrastructure push, especially railways, has been a good part of the Budget,” mused Rajan Mittal, Vice-Chairman, Bharti Enterprises. “The FDI norm relaxation for media, aviation, insurance and single-brand retail is a welcome move,” he said, “this will lead to job creation.”
Chandrajit Banerjee, Director General, Confederation of Indian Industry (CII) too felt that the Budget would “ignite investment” in sectors that are “labour absorbing” like the housing sector and construction. “MSMEs are large job creators and they will get support from the creation of a payment platform to clear their dues,” he pointed out. Pranav Sayta, Partner & National Leader, Transaction Tax Ernst & Young LLP said, “Particularly for affordable housing, MSME sector and startups, I think really good steps have been taken.”
Rahul Munjal, Chairman and Managing Director, Hero Future Energies, was convinced that the Skill India Mission and labour reforms would help create jobs. “Government spending on infrastructure is another way to boost employment,” he added.
Siraj Chaudhry, Senior Advisor, Cargill India, however cautioned that the job scenario would not change all of a sudden. “A number of things have to happen alongside creating rural entrepreneurs and skill-building,” he said. “I think the focus has to be opportunities created in rural India to create jobs,” he said emphasising on agri-processing and the agri supply chain in particular.