Given that the promise of better growth and jobs played a decisive role in people preferring the NDA over UPA in the last general elections, the FY16 budget would surely be tested more on the job creation parameter than anything else. More than 63% of the population in India is in the age group of 15-59 years, which is a great opportunity. But it also poses a great challenge for the government in terms of health, education and skilling. A lot would depend on how the country takes advantage of this demographic window in the next couple of decades. Finance minister Arun Jaitley initiated this process in the FY15 budget, by focusing on the labour-intensive sectors such as textiles, food processing, construction and tourism but this has to be taken to the next level quickly.
As per a CRISIL study, 69 million jobs can be added in the non-agricultural sector by 2020 if the government pursues a pro-jobs policy. In a business-as-usual situation, on the other hand, only 41 million jobs would be created. A pro-jobs approach would mean extra emphasis on improvement in physical infrastructure and power availability along with the labour law changes which would create about 11 million manufacturing jobs by 2020. Not doing this will result in a loss of 4 million jobs. Within the overall framework, though, Jaitley needs to also promote labour-intensive services extensively as manufacturing alone will not be able to generate the level of employment required. CRISIL estimates sectors like trade, hotels and restaurants, education and health, and personal and community services can generate another 36 million jobs by 2020. But all this can’t be achieved with the help of just a skill development wing in the government; Jaitley will have to look at the needs of specific industries and design budget proposals accordingly.
