1. Budget 2017: What Modi government does not understand about job creation

Budget 2017: What Modi government does not understand about job creation

While the questions of ambition and populism for this year's Union budget have been doing the rounds even before it was presented, it is now clear that the government is clueless about the employment generation area.

By: | Updated: February 2, 2017 3:54 PM
budget jobs, budget employment, job creation, employment generation, budget 2017, union budget 2017, budget job creation, budget employment generation, budget impact, budget impact india, budget news While macroeconomic data is only given an outside picture, inside the ground it has been quite hollow, with slow growth after demonetisation, as well as a dip in the gross capital, private investment, education and health. Similarly, there have been no efforts to up the job strategy. (Source: Reuters)

While the questions of ambition and populism for this year’s Union budget have been doing the rounds even before it was presented, it is now clear that the government is clueless about the employment generation area. While macroeconomic data is only given an outside picture, inside the ground it has been quite hollow, with slow growth after demonetisation, as well as a dip in the gross capital, private investment, education and health. Similarly, there have been no efforts to up the job strategy.

While the economic measures have not been able to reach the common denominator, added to the fact that the much talked about demonetisation, not being able to garner huge dividends, it leads to the government being pressurised into giving relief to the masses in the form of tax cuts among other things. The main agenda according to our finance minister was TEC (transform, energise and cleanse), but evidently, the narrative was more inclined towards the cleansing part. This means while the budget was not totally populist, but at the same time, it was not much of a visionary. Additionally, the move of not letting one person donate more than Rs 2,000 to political parties, might not lead to much of an effect but will at least be a topic of discussion, and the parties will at least be a bit warier.

Taxation in India is going to be a topic of discussion now since demonetisation did not prove to provide immediate results. The government will be pressurised to play the role of a punisher. The fact that, the government is trying to be transformational is impressive at least on the surface, but there is a need to understand the schemes. As far as rural India is concerned, the initiatives look too familiar. Still, there are some instruments for farmers, but it is difficult to analyse how they will increase their income. There is nothing really new in the education and health sectors. Despite promises of reforms these sectors have been neglected, similar to every other previous government. Similarly, the private sector is still in a muddle.

This budget for 2017-18 has been more about giving away to the people in the form of tax cuts, projects but they don’t necessarily open up avenues for job creation. A reactive policy is hardly going to manage the huge employment crisis in the country. According to government data, only a little more than lakh jobs were created in India in the year 2015, while millions of people become employable every month. Even after this, the Modi government does not prioritise the need for opening up to global supply chains and skill development among other important methods. Giving incentives to small companies and putting rules on bigger ones is also an aspect which has lead to lesser jobs as the large firms do not enjoy the boost needed to hire more. The same thing was seen this year where the government cut corporate tax for small companies, from 30 percent to 25 percent.

When it comes to skill development, the government seems clueless. Despite starting the Skill India program in 2015, and promising to generate hundreds of millions of job-ready individuals, could manage to provide employment skills to only a little more than a million in its first year. Meanwhile, most of these people left the course midway, and not even a lakh people got jobs. One of the reasons is confusion, as there are so many ministries which run a lot of skill courses, and now with the new budget, there are a few more.

All in all the focus has been more on continuity and stabilising a ship which the demonetisation rocked, instead of a change which was required now than earlier. While the apprehensive government might have been able to balance the demonetisation move’s ill effects, for now, it remains to be seen how it reacts to the global slowdown.

  1. A
    Akshar B
    Feb 3, 2017 at 5:12 am
    A failed PM and bellied hopes. Now I feel like I wasted my vote by choosing BJP.
    Reply
    1. g
      gg109
      Feb 2, 2017 at 5:32 pm
      What does "up the job strategy" even mean? Jargon filled meaningless criticism. Can't find genuine faults?
      Reply
      1. Krishna Singh
        Mar 19, 2017 at 7:39 am
        hi.....
        Reply

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