Union budget takes definitive steps to create jobs for India's youth
The eleventh full-term budget under Modi 3.0 walks the fiscal discipline path, despite being a coalition government, he is heading. The surprise results from June 4th, which threw in a coalition government for Prime Minister Modi, perhaps for the first time in his career, did not stop his budget proposals, political with sound economics in the background. In the run-up to the budget, many had expected, that the Finance Act would be populist keeping in mind the state elections of Haryana, Maharashtra and Jharkhand scheduled later this year. However what came out from Nirmala Sitharaman’s tab, was a document that chose to focus on core areas of long-term growth and decent infrastructure spending, without giving in to populist demands. The key theme as highlighted by Government is Employment.
Questions have been raised in post-budget analysis regarding the feasibility of the schemes announced for creating lakhs of jobs for the youth of the country. The apprentice scheme promising a government stipend for lakhs of youth per year, in some of the largest companies of India, may only be a game changer if these young interns are attentively skilled to be formally absorbed into jobs, once their tenure is over. There are serious concerns regarding the abundant availability of a relatively unskilled workforce, hanging around in large offices, without learning any meaningful skills.
Similar questions have been raised regarding the EPFO-linked new job incentivisation scheme, which has various blindsides, possibly pushing a well-thought-out policy push into a dark corner. It may be said that the policy push is primarily to bring more youth employed in the informal sector within a formal standard workforce and instil a financial literacy discipline in them early on. However, this financial literacy falls flat when one looks at the changes made in the tax structures for any investor punting in the speculative equities market. The increased rate of capital gains tax and a general push to the new income tax regime , seem to be at cross purposes of the financial literacy programme, the government wants youth to undertake to avail of full benefits of INR 15,000, as a first month’s salary subsidy. The earlier tax regimes instilled a sense of financial responsibility for any youth entering the formal job sector, with several choosing at least one product, as a means to save and claim tax rebates in the future. This set them off for a long financial discipline path during their tenure as working professionals, which now seems to be slowly being eased out. The counter-argument the government may have is, that they want the consumer economy to grow first, led by the youth, who may be more willing to spend on food items, entertainment etc, with the monthly salaries they would be drawing in their new jobs. However, it prevents them from getting a into habit of savings, which are useful during rainy days or Covid type crises. Yes, the government, did well to maintain the fiscal discipline glide path, buoyed by a better than expected GDP growth, and lumpy dividend payouts from the central bank. Overall inflations, except for food are also within tolerable levels, giving the government, a cushion for spending on welfare projects, it feels are essential. Union budget 24-25 is an attempt woo back disgruntled voters.
The lesson BJP appears to have taken from the June 4 results is, that the youth are excited about huge temples, few smart glitzy trains, and cheap mobile data in their ‘Made in India’ phones, but they are increasingly getting anxious to earn money, have an engaging occupation, which feeds into their aspirational upwardly mobile lifestyle. Then there are pulls and pressures of coalition politics, with NDA’s two partners TDP and JD(U) having their wish lists for catering to their core constituencies. A long-term dice has been rolled, perhaps NDA 3.0 with this budget has achieved the goldilocks balance.
(The writer is a policy analyst, views are personal)
