The bud­get must catal­yse start-ups

In­dia’s pri­mary devel­op­ment chal­lenge is to re­skill and train more than a bil­lion young adults

Hindustan Times (Chandigarh) - - HINDUSTANTIMES COMMENT - Varun Gandhi

In­dia of­fi­cially has 18 mil­lion un­em­ployed (ILO, 2017), with the ma­jor­ity of them young peo­ple. Ac­cord­ing to 2017 es­ti­mates from the of Labour and Em­ploy­ment, or­gan­ised em­ploy­ment is cur­rently just 10.1% of to­tal em­ploy­ment, with the ma­jor­ity of our more than 600 mil­lion work­force em­ployed in in­for­mal jobs with lim­ited so­cial se­cu­rity.

The de­mo­graphic growth con­tin­ues – we’ll have the largest work­force in the world within a decade, with a sur­plus of work­ing age youth (more than 47 mil­lion) com­pared to a global deficit of 56.5 mil­lion.

At present, av­er­age daily wage rates re­main low in ru­ral and ur­ban In­dia. Typ­i­cally, a farmer now earns ₹2,400 per month per hectare of paddy and about ₹2,600 per month per hectare of wheat, while farm labour­ers earn less than ₹5,000 per month ac­cord­ing to In­di­as­tat 2016. Av­er­age daily wage rates in agri­cul­tural oc­cu­pa­tions con­tinue to re­main sig­nif­i­cantly low — plough­ing would have earned an able-bod­ied labourer ₹280.50 in daily wages in 2016, while a woman would earn just ₹183.56. Con­sumer in­fla­tion eats at this, with agri­cul­tural and in­dus­trial labou- rers af­fected by a dou­bling of con­sumer price in­dex num­bers (332 in 2004 to 764 in 2014) in the past decade. Mar­ginal farm eco­nom­ics is dis­cour­ag­ing the youth from greater par­tic­i­pa­tion in the agri­cul­tural labour mar­ket, un­der­lin­ing the need for bet­ter qual­ity jobs.

His­tor­i­cally, the govern­ment ac­corded pri­or­ity to this is­sue. A Na­tional Youth Pol­icy was first for­mu­lated in 1988, while the Youth Pol­icy of 2003 sought to en­cour­age youth skill devel­op­ment – fur­ther strength­ened by the cre­ation of the Na­tional Council for Skill Devel­op­ment in 2005. The Na­tional Youth Pol­icy of 2014 had the govern­ment promis­ing to spend ₹90,000 crore on youth through a va­ri­ety of yearly tar­geted schemes. How­ever, much re­mains to be done.

Our pri­mary devel­op­ment chal­lenge is to ed­u­cate and re-skill more than a bil­lion adults in the next few decades, help­ing trans­form them into pro­duc­tive mem­bers of our so­ci­ety. We have his­tor­i­cally spent a pit­tance on re­form­ing our ed­u­ca­tion sys­tem by adapt­ing in­no­va­tions (the cur­rent fi­nan­cial year 2018 spend is just ₹275 cr).

Given our pop­u­la­tion, we should ideally have at least 50 world-class mul­ti­dis­ci­plinary re­search uni­ver­si­ties.

In re­al­ity, our re­search uni­ver­si­ties han­ker for fund­ing. Bud­getary al­lo­ca­tions for ed­u­ca­tion have been piece­meal, with­out a fo­cus on build­ing to­tal an­nual train­ing ca­pac­ity (cur­rently at 4.3 mil­lion stu­dents an­nu­ally; as op­posed to 12 mil­lion peo­ple en­ter­ing the work­force ev­ery year).

There are ways to re­solve this: the up­com- ing bud­get should seek to en­cour­age the pri­vate sec­tor to utilise the Prad­han Mantri Kaushal Vikas Yo­jana to en­hance em­ploy­a­bil­ity skills, es­pe­cially in a work en­vi­ron­ment in which ris­ing au­to­ma­tion could put more than 69% of In­dian jobs at risk. The Na­tional Skill Devel­op­ment should be pro­vided sig­nif­i­cant bud­getary sup­port.

An em­ploy­ment guar­an­tee can help. In early 2013, amid a fi­nan­cial cri­sis, the Euro­pean Union was be­set with ris­ing un­em­ploy­ment among young peo­ple. This was ad­dressed by the enun­ci­a­tion of a youth guar­an­tee. The Youth Em­ploy­ment Ini­tia­tive was funded to the tune of €3.2bn for FY15 and had an im­me­di­ate im­pact – the av­er­age rate of youth un­em­ploy­ment fell to 16.9% within three years.

The govern­ment should aim to catal­yse the cre­ation of start-ups. While the ex­ist­ing “Startup In­dia Fund” is a promis­ing ini­tia­tive, fund de­ploy­ment re­mains a sig­nif­i­cant is­sue – with only ₹605 crore com­mit­ted by SIDBI and with just ₹337 crore in­vested across 75 start-ups. The bud­get can ex­plore mak­ing it easy for en­trepreneurs to launch start-ups, ad­min­is­ter them and exit cleanly, if re­quired. Te­lan­gana has sought to help start-ups by pro­vid­ing them with a work­ing space and an en­cour­ag­ing en­vi­ron­ment in T-hub, an in­cu­ba­tor for start-ups. It is now as­so­ci­ated with more than 835 start-ups.

Ar­tic­u­lat­ing a Na­tional Em­ploy­ment Pol­icy is im­por­tant in such times – re­cent re­ports that the govern­ment is mov­ing in this di­rec­tion are heart­en­ing. It should also at­tempt to of­fer a roadmap for the cre­ation of qual­ity jobs across sec­tors, with fis­cal and tax in­cen­tives to en­cour­age en­trepreneurs and pri­vate sec­tor firms to hire more in the or­gan­ised sec­tor. We should fo­cus on re­duc­ing reg­u­la­tory bur­den of sec­tors such as tex­tile, con­struc­tion and in­fra­struc­ture that have a high po­ten­tial of gen­er­at­ing em­ploy­ment in the mil­lions.

With ris­ing trade tar­iff bar­ri­ers, and a po­lit­i­cal land­scape hos­tile to­wards glob­al­i­sa­tion, the win­dow for scal­ing up light man­u­fac­tur­ing is clos­ing. In­dia must en­sure it is the pri­mary tar­get for the mi­gra­tion of job gen­er­at­ing light man­u­fac­tur­ing in­dus­tries from China and the West. In pre-colo­nial times, In­dia had mil­lions work­ing to man­u­fac­ture muslin which clothed the world. The pri­mary In­dian bud­getary chal­lenge is to in­crease the em­ploy­a­bil­ity of In­dia’s labour force.


Grad­u­ates queue up to reg­is­ter their names at an em­ploy­ment of­fice

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