Context:
A major focus of this Budget speech is the change in approach toward employment, with a noticeable increase in its mentions. “Employment” was the central theme of the Budget, highlighting the Prime Minister’s package aimed at facilitating jobs and skills as a top priority. The proposed ₹2 lakh crore package aims to assist 4.1 crore youth over five years through three employment-linked incentive schemes.
Relevance:
GS Paper – 3
- Indian Economy and issues relating to Planning
- Mobilization of Resources
- Growth, Development and Employment
- Inclusive Growth and issues arising from it
Mains Question:
Budget’s stress on employment is good but a lot more needs to be done in this direction. Discuss. (10 Marks, 150 Words).
Schemes Introduced:
Employment-Linked Incentive Schemes:
Scheme 1:
- Focuses on recognizing first-time employees and providing support to both employees and employers.
- Offers a direct benefit transfer of one month’s salary in three installments to newly employed workers registered with the Employees’ Provident Fund Organisation (EPFO).
- Eligibility: Salary up to ₹1 lakh per month.
- Expected to benefit 210 lakh youth.
Scheme 2:
- Encourages additional employment in the manufacturing sector, linked to EPFO contributions for first-time employees in the first four years.
- Expected to benefit 30 lakh youth and their employers.
Scheme 3:
- Covers additional employment in all sectors.
- The government reimburses employers up to ₹3,000 per month for two years towards their EPFO contribution for each additional employee.
Skill Development Scheme:
- Aims to skill 20 lakh youth over five years.
- Upgrades 1,000 Industrial Training Institutes in a hub-and-spoke arrangement with a focus on outcomes.
Internship Scheme:
- Provides one crore youth with 12-month internship opportunities in 500 top companies over the next five years.
- The government provides an internship allowance of ₹5,000 per month and a one-time assistance of ₹6,000.
Proposed Plan:
- Two of these schemes encourage the hiring of new entrants into the job market for at least a year with subsidies, while the third incentivizes companies to increase hiring beyond their previous year’s workforce.
- To bridge the gap between skills and available jobs, there is a plan to revamp 1,000 industrial training institutes with industry-aligned courses, along with an ambitious internship program for a crore youth in 500 top companies.
- The details of this internship placement program are yet to be developed, but the Centre has promised to cover most of the stipend costs.
- Companies can voluntarily participate in the scheme and use their corporate social responsibility funds for the remaining costs.
- The emphasis on addressing the jobs crisis, highlighted by the Opposition in the electoral battle, marks an acknowledgment of an issue the government had previously downplayed.
Jobless Growth:
- It’s important to note that critiques of jobless growth aren’t exclusive to this government—the UPA faced similar criticisms.
- A part of the issue is investors’ preference for capital-intensive investments, partly because India’s labor laws haven’t kept pace with the liberalized economy, discouraging the creation of larger units with more employees.
- The recent distress has been more severe, as the informal sector, which provides most of India’s jobs, was hit by successive shocks like demonetization, the GST rollout, and COVID-19 pandemic lockdowns.
- Efforts to boost private investments through incentives have focused on production levels rather than new jobs.
- With rating agencies calling India’s high youth unemployment a structural threat to long-term growth, the effectiveness of this package, which officials hope will encourage hiring at the margins, will be closely monitored.
- However, for the overall employment outlook to improve, the government needs to do more, including promptly filling the many vacancies in its own ranks.
Conclusion:
Creating conditions to boost consumption is crucial, as the private sector won’t feel compelled to expand capacity or hire more people without that incentive, even with a subsidy available.
