Aug 06, 2024
UNION BUDGET 2024-25: EMPLOYMENT CHALLENGES
The Union Budget for 2024-25 places a significant emphasis on addressing the employment crisis in India, acknowledging a critical issue that has been a focal point of political discourse. The Budget introduces a comprehensive ₹2 lakh crore package aimed at creating job opportunities and equipping the workforce with relevant skills. This package is intended to assist 4.1 crore youth over the next five years through three key employment-linked incentive schemes.
Key Components of the Employment Package
1. Incentive Schemes for Fresh Entrants:
- Two schemes specifically encourage the hiring of fresh entrants into the job market, ensuring that they are employed for at least one year. These schemes aim to provide subsidies to employers who hire young, inexperienced workers, thereby lowering the entry barriers for youth and providing them with much-needed work experience.
2. Incentives for Scaling Up Employment:
- A third scheme incentivizes companies to increase their workforce beyond the previous year's levels. This is designed to stimulate job creation by making it financially attractive for firms to expand their headcount.
3. Skill Development Initiatives:
- The Budget proposes upgrading 1,000 industrial training institutes (ITIs) with industry-aligned courses. This is aimed at bridging the gap between the skills available in the labor market and those required by employers, enhancing the employability of the workforce.
4. Ambitious Internship Programme:
- An internship programme targeting one crore youth in 500 top companies has been announced. The Centre will bear the bulk of the stipend costs, with firms encouraged to use their Corporate Social Responsibility (CSR) funds for the remainder. This programme aims to provide practical work experience and improve job readiness among young people.
Challenges and Critiques
The employment situation in India has been a point of contention, with critiques often highlighting the issue of jobless growth. The preference for capital-intensive investments, driven by outdated labor laws and regulatory hurdles, has been a significant factor discouraging the creation of labor-intensive industries. Furthermore, the informal sector, which provides a large portion of India's employment, has been adversely affected by several economic shocks, including demonetization, the Goods and Services Tax (GST) rollout, and the COVID-19 pandemic lockdowns.
Despite the good intentions behind the employment package, its success will depend on several factors:
- Implementation and Uptake: The effectiveness of the incentive schemes and internship programmes will depend on the level of participation from the private sector and the smooth implementation of these initiatives.
- Structural Reforms: Long-term job creation requires reforms in labor laws to make hiring and firing more flexible, thus encouraging businesses to expand their workforce.
- Government Vacancies: The government must expedite the filling of lakhs of vacancies in public sector units and government departments, which can provide immediate employment opportunities and set a positive example for the private sector.
- Boosting Consumption: For businesses to expand and hire more employees, there needs to be an increase in consumer demand. Without a strong consumption push, the private sector may not see sufficient reasons to expand capacity or workforce, despite the availability of subsidies.
Conclusion
The Union Budget 2024-25's focus on employment marks a significant acknowledgment of India's pressing jobs crisis. While the proposed measures show promise, their impact will be closely monitored, particularly regarding how effectively they can stimulate job creation and address structural unemployment issues. The government's approach reflects a broader recognition of the need for economic policies that not only promote growth but also ensure that growth is inclusive and benefits the labor market. The success of these initiatives will depend on a coordinated effort between the government, private sector, and other stakeholders to foster a conducive environment for job creation and economic stability.
SRIRAM's