In the first Union Budget since the 2024 Lok Sabha elections, “employment, skilling, MSMEs and the middle class” appear to play centrestage for the Bhartiya Janta-led NDA government. Presenting the Budget in Lok Sabha, Finance Minister Nirmala Sitharaman allocated Rs 1.48 lakh crore for education, employment and skilling in the country.
Amid a crisis of unemployment among youth, three incentive schemes to boost employment in manufacturing and other formal sectors of the economy have been proposed to be implemented as part of the Prime Minister’s Budget package. The five total schemes under the PM package have been allocated Rs 2 lakh crore.
Scheme A: The scheme for first timers will include paying a month’s wages to all employees entering the workforce across all formal sectors. It will also ensure direct benefit transfer of one month’s salary in three instalments to first-time employees as registered with the EPFO up to Rs 15,000. The eligibility limit will be Rs 1 lakh per month. The scheme is likely to benefit 210 lakh youths.
Scheme B: The second scheme intends to boost job creation in manufacturing sector by incentivising employment of first timers for both employees and employers. The scheme will provide an incentive at specified scale directly to the employee as well as the employer with respect to EPFO contribution in the first four years of employment. This is likely to benefit 30 lakh youths and their employers.
Scheme C: The third scheme focuses on employers and proposes to cover all additional employment within the salary bracket of Rs 1 lakh per month in all sectors will be counted. As per this scheme, employers will be reimbursed up to Rs 3,000 per month for two years by the government towards the EPFO contribution for each additional employee. The scheme is expected to incentivise additional employment of 50 lakh persons.
To provide further boost to youth employment, the government has proposed to launch a scheme for providing internship opportunities in 500 top companies to 1 crore youth over a five-year period. Under the scheme, an internship allowance of Rs 5,000 per month, along with a one-time assistance of Rs 6,000 will be provided to youths. These youths will gain exposure for 12 months to real-life business environments, varied professions and employment opportunities. Companies will bear the training cost and 10 per cent of the internship cost from their CSR (corporate social responsibility) funds. As per the Companies Act 2013, certain classes of profitable organisations are required to shell out at least 2 per cent of the three-year annual net profit towards CSR activities in a particular financial year.
Other employment or economic activity generation schemes will also get a boost, the FM said. These include schemes like PM Vishwakarma, PM SVAnidhi, NRLM and Stand-UP India aimed at supporting economic activities by craftsmen, artisans, SHGs, SC/ST and women entrepreneurs and street vendors.
Women’s empowerment
The Union Budget 2024 emphasises women’s participation in workforce, financial empowerment and property ownership. Over Rs 3 lakh crore has been allocated for development of schemes benefiting women and girls seeking employment including setting up hostels and creating women-specific skilling programs.
The focus on women has been hailed as a step toward positive ‘gender budgeting’. This means applying the gender lens to economics and policy processes with the objective to distribute public funds in a way that advances gender equality and takes into account the particular requirements of each gender. Economic researcher Janet G Stotsky described “gender budgeting” as an approach to budgeting that can improve it, when fiscal policies and administrative procedures are structured to address gender inequality … When properly done, one can say that gender budgeting is good budgeting’.
Gender budgeting, which was first adopted by the Indian Union government in 2000, is based on the understanding that gender-sensitive formulation, resource allocation, and ongoing monitoring are necessary to address the vulnerabilities that women encounter at a day to day level, be it at home or at work. States have India have followed suit since.
In a 2016 International Monetary Fund (IMF) working paper investigating the impact of gender budgeting on gender inequality and fiscal spending in India, co-authors Stotsky and economist Azad Zaman noted that “states with gender budgeting efforts have made more progress on gender equality in primary school enrolment than those without, though economic growth appears insufficient to generate equality on its own. The implications of gender budgeting for fiscal spending were more ambiguous”.
In keeping with the same, the government will look at further lowering duties for properties purchased by women and making it an essential component of urban development schemes. In a bid to increase ownership of homes by women, Sitharaman also proposed to discontinue the quoting of Aadhaar Enrolment ID in place of Aadhaar number with respect to taxation purposes. "We will encourage states which continue to charge high stamp duty to moderate the rates for all and also consider further lowering duties for properties purchased by women. This reform will be made an essential component of urban development schemes, encourages states with high stamp duty to moderate rates for all, lower duties further for properties purchased by women," she said in the Budget speech.
There is a well-established linked between gender equality and improved economic efficiency and productivity. “Improving women’s opportunities in education, access to appropriate healthcare, and ability to participate in paid employment are all crucial elements in achieving gender- and poverty-related goal” that have been embodied in the Millennium Development Goals and its successor, the Sustainable Development Goals. Gender budgeting can thus indirectly contribute to stronger and more inclusive or equitable economic growth via its influence on fiscal policies.
Unemployment and job market in India
The Economic Survey Of India tabled ahead of the Budget, noted that India's workforce is nearly 56.5 crore, with more than 45 per cent employed in agriculture, 11.4 per cent in manufacturing, 28.9 per cent in services, and 13.0 per cent in construction. It further noted India needs to generate 78.51 lakh jobs annually in non-agriculture sectors to manage the increasing workforce.
Covering aspects like the labour market including Artificial Intelligence (AI), gig work, and climate change, the Survey noted that 57.3 per cent of the total Indian workforce is self-employed, and 18.3 per cent is working as unpaid workers in household enterprises. Casual labour comprises 21.8 per cent of the total workforce and regular wage/salaried workers are 20.9 per cent of the total workforce. Shift to self-employment has been observed more among women in the workforce, especially since the Covid-19 pandemic.
The survey also noted that as per estimates, about 51.25 per cent of the youth is deemed employable. That means about one in two are not yet readily employable, straight out of college. However, it must be noted that the percentage has improved from around 34 per cent to 51.3 per cent in the last decade." The Survey also said that in terms of the job situation in India, there have been many positive trends as the result of economic reforms, technological advancement, skill development etc.
The annual Periodic Labour Force Survey (PLFS) by the National Statistical Organisation, Ministry of Statistics and Programme Implementation (MoSPI) stated that the all-India annual unemployment rate (UR) has been witnessing a declining trend since the COVID-19 pandemic. This has been accompanied by a rise in the labour force participation rate (LFPR) and worker-to-population ratio (WPR).
The India Employment Report 2024 published by the International Labour Organisation also noted an improvement in employment conditions over the years. It found that “between 2005 and 2022, there was a slow but steady increase in values, indicating improvement in employment conditions”. The trend was “was halted – and even reversed after 2019 – after onset of the COVID-19 pandemic”.
Notwithstanding the modest improvements, the report noted that employment conditions remained poor. “Employment in India is predominantly self-employment and casual employment” with nearly 82 per cent of the workforce engaged in the informal sector and nearly 90 per cent employed informally. “Due to the nature of employment growth since 2019, the share of total employment, which is in the informal sector and/or in informal employment, increased.”
Stagnating wages is another issue to be reckoned with. The ILO report shows that while wages of casual labourers maintained a modest upward trend during 2012–22, real wages of regular workers either remained stagnant or declined. Self-employed real earnings also declined after 2019. Overall, wages have remained low. As much as 62 per cent of the unskilled casual agriculture workers and 70 per cent of such workers in the construction sector at the all-India level did not receive the prescribed daily minimum wages in 2022.
Employment growth remained stagnant up to 2019 and then moved upward. This pattern was intensified between 2012 and 2019, when gross value added continued to grow at 6.7 per cent, but employment growth was nearly negligible, at 0.01 per cent. After 2019 and due to the COVID-19 pandemic, there was a substantial increase in employment, with agricultural employment growth even outpacing the growth in agriculture gross value added.
The rise in labour productivity up to 2019 was accompanied by capital deepening, indicating that economic growth was increasingly associated with technological progress and productivity gains rather than employment.
Youth employment has remained of poorer quality than employment for adults. “Employed youths have been much more likely to be in more vulnerable occupations (informal) or in the informal sector”, the report noted. It also noted that “India has a large proportion of youths, particularly young women, not in education, employment or training”.
How leaders reacted
Opposition leader Rahul Gandhi slammed the budget as a “Kursi Bachao” budget, adding that it was a "copy and paste" job of the Congress manifesto for 2024 polls and previous budgets. Congress stated in a social media post that the government had "tacitly" admitted that "mass unemployment is a national crisis", and said the budget has "political compulsions written all over it".
Samajwadi Party chief Akhilesh Yadav slammed the Budget, claiming that it has ignored the interests of the youth and farmers. Speaking to reporters in the aftermath of presentation of Budget in Parliament, Yadav linked her announcements of several development measures for Bihar and Andhra Pradesh to the BJP's political compulsion to "save" its government and asked if there was anything for Uttar Pradesh, India's most populous state.
Dismissing the announcement of internship for the youth, Yadav said they want permanent jobs and not short-term measures. Blaming the government for unemployment, he asked, “Will reservation be given for these short-term employment initiatives?”
He further asked if it was possible to develop India without developing Uttar Pradesh? The state has no "mandi" for farmers, and the budget's announcement for the highway from Buxar in Bihar should have included extension to Purvanchal Expressway. “Agriculture has been overlooked and there was nothing on rural development. Agriculture sector has the lowest allocation. This is a disappointing budget. You cannot give employment by just giving internship,” Yadav said.
