EDITOR-IN-CHIEF
Jobs and inflation are the two critical factors in any economy. In India, inflation control is the remit of the Reserve Bank of India. However, the government can alleviate the impact of inflation through welfare measures such as the free distribution of food. As for jobs, the government can stimulate employment creation through its capital expenditure. This can create a virtuous cycle. Government expenditure on infrastructure projects creates jobs during their construction and has a multiplier effect for jobs in all the industries that are suppliers for the projects. As the capacity of these industries reaches its limits, private investment kicks in as they expand. This creates more jobs. Jobs mean incomes, which results in consumption across the economy, completing the virtuous cycle. This is what the Modi government has been betting on through successive budgets. After she presented the 2023 edition in Parliament, Union finance minister Nirmala Sitharaman called the exercise “a beautiful balancing act.” That it truly was. From its early penchant for shock and awe, the Modi government has settled into a preference for farsighted policymaking. In Budget 2022, it had hiked the capex for infrastructure by 35.4 per cent from the previous year, from Rs 5.5 lakh crore to Rs 7.5 lakh crore. This year, the finance minister increased it by another 33 per cent to Rs 10 lakh crore, or 3.3 per cent of GDP. This is a healthy number, which should create the needed jobs. It was not just infrastructure projects that got a capex boost. Other key employmentgenerating sectors have also been offered a clutch of incentives. The Rs 2 lakh crore credit guarantee scheme and sundry other benefits extended to MSMEs should help put some lifeblood back into a sector that has been largely comatose since demonetisation. Given the 110plus million jobs it creates accounts for well over 20 per cent of overall employment, this is a revival worth watching out for. A new Agriculture Accelerator Fund will help agritech startups in rural India. Tourism, another jobgenerating sector, has got the outline of a benevolent push: 50 destinations will be selected for a facelift, with airports and other ancillary attractions for domestic and international travellers. Infrastructure spending is, of course, an indirect way of creating jobs. As far as direct employment is concerned, the Centre has followed its recent trend of reducing the budget for its rural job guarantee scheme, allocating only Rs 60,000 crore for public works under the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) for 202324. That’s 33 per cent lower than the Rs 89,000 crore revised estimates for FY23. So clearly, the Centre is betting on crowding in private investment and, along with its own capex, enough jobs being created so as not to have to provide jobs through MNREGA. Since 57 million people accepted MNREGA jobs last fiscal, that is a very perceptible rejigging of targets in the world’s biggest poverty reduction scheme. For our cover story this week, Executive Editor M.G. Arun marks a double manoeuvre. At one level, we analyse why job creation was such a focus for the Modi regime, a year ahead of the general election. Every year, 12 million Indians join the workforce. Sadly, according to the CMIE data for December, 48 per cent among the 77 million young Indians in the 2024 age group were unemployed. That’s more than double the 20 per cent in 201718 and higher than even the 30 per cent just before the pandemic. Even for the 2529 age group, it was a bruising 14 per cent. This is the muchtouted demographic dividend that is being wasted. India has a labour force of 443 million, but only a fourth have what can be called ‘regular jobs’—jobs with a monthly salary and some protection from job loss. Over 75 per cent of Indian workers have casual jobs or are selfemployed. Neither ensures regular income or work. Our bureaus also put a human face on those dry statistics. This is where we encounter some of those sullen millions—like 24yearold commerce graduate Kuldeep Tripathi from Lucknow, who sells mobile accessories from a park bench.
The issue of employment in India is a complex one and quite intractable. Firstly, the problem is structural. Agriculture employs 46 per cent of the workforce but contributes only 20 per cent to GDP. Services employ over 32 per cent of the workforce and contribute 54 per cent and industry employs around 21 per cent and contributes 26 per cent. The problem in India is not so much unemployment but disguised underemployment. People are being employed unproductively. Several governments have tried to shift this imbalance, with limited success. Plus, the data on unemployment is itself misleading. The definition of an unemployed person is one looking for a job, but most people in India cannot afford to be unemployed as they live so much on the margins. Typically, bereft of a desired income, they lower their standard of living and do something to earn money. Budget 2023 has made a concerted effort to address this issue not only by capex infusion but by various schemes to take care of marginal communities like artisans and craftspeople. The new Pradhan Mantri Vishwakarma Kaushal Samman (PMVIKAS) scheme has been rolled out to help this segment improve the quality of its products, scale up and access better markets, integrating its practitioners with the MSME value chain. There is also a greater emphasis on skills to make people employable. Some 30 Skill India International Centres will be set up across states to help youth aim for jobs abroad; skill sets attuned to the digital world are envisioned as a core part of this. Perhaps mindful of the landminestrewn politics that will characterise the runup to a slew of state elections and the big one next year, the FM was silent on the privatisation agenda, including the bank privatisation plan announced in the 2021 budget. The Centre also lowered the disinvestment target to Rs 51,000 crore. In the previous budget, it had plans to raise Rs 65,000 crore through disinvestments, which it later revised to Rs 50,000 crore. Only Rs 31,106 crore had been collected till January 18. In August 2021, following a budget announcement on asset monetisation that year, the Centre had also announced a plan to raise Rs 6 lakh crore under the National Monetisation Pipeline. No mention was made of its progress in this budget, although the Centre has been claiming the scheme is on track and doing well in some sectors. Ultimately, the government can do only that much in terms of public investment. It is, after all, 7 per cent of GDP while private investment is some 2023 per cent, more than thrice the government’s. The budget can only be a catalyst. The government is to be applauded for maintaining fiscal discipline despite electoral temptations and putting the country on the path of sustained growth.