Union Budget 2020: A Missed Opportunity To Tackle Unemployment

Continued lack of employment opportunities for India’s youth has already led to disaffection among them and that is evident partly from the manner in which student unrest (albeit triggered by the Modi regime’s controversial Citizenship Amendment Act) has spread. Half of India’s 1.3 billion people are below the age of 25. This year, it is expected that the average age of an Indian will be 29 years (for China, it will be 37). As education levels rise for young Indians so do their aspiration for good jobs and better standard of living. If employment rates don’t rise their hopes will not be met.

That could be a ticking time bomb. Many believe the countdown to an explosion has already begun. Educated urban youth in India have readily joined the movement against the Citizenship Act, which is being seen as discriminating against the largest minority community in India, Muslims, who constitute more than 14% of Indians. The youth’s opposition to the Act must be seen holistically. It is a symptom of the greater disaffection that young Indians feel. Even as the number of those who graduate from schools and colleges increases, their prospects of landing desirable jobs have diminished. Before long this could be a problem instead of the demographic dividend that a youthful India could benefit from.

In that context, Finance Minister Nirmala Sitharaman’s Budget has missed a big opportunity. The annual Budget in India has always been a mega economic event in the country. Finance ministers, regardless of which political party they represent, use the exercise, which ought to be a routine balancing of the government’s expenditure and revenue streams, not only as an opportunity to announce the government’s economic policies but also as a podium to offer sops and incentives to different sections of the population—an exercise that is seen as a means to garner electoral support from voters.

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As a consequence, the media hype gets heightened and the Budget’s announcement in Parliament becomes a red-letter day for newspapers, TV channels and other publications. In recent years, as the Indian economy has become less regulated; tax structures have become simplified; and government controls on different economic sectors have loosened, the Budget’s importance has declined. It is no longer an event that offers governments a chance for grandstanding or making big announcements for changing policies or ushering in new economic strategies.

The Indian economy has been ailing in recent months. It is probably at the worst low point that has been witnessed in over a decade. Last year, GDP growth rate slumped to 4.8% from 2018’s 6.8%; prices across many categories of products, including food, rose; and sales of consumer products stagnated. Industries, including automobiles, white goods, and other categories held off investment plans as inventories of unsold products built up. The youth—65% of Indians are under 35—were impacted adversely too as estimates of the unemployment rate rose to nearly 8% at the end of 2019.

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In her Budget, Sitharaman announced a series of incentives—personal income tax cuts; bank deposit insurance; and some infrastructure investments—but none of them were designed specifically to increase the potential for generating more employment. Most of India’s youth are based in rural parts of the country. Nearly 66% of Indians live in villages. And while 44% of Indians are employed in agriculture, the sector accounts for a shade over 15% of GDP. Labour productivity in the sector is low and many Indians are what economists call “disguised unemployed”—that is they work on farms but don’t add anything in terms of incremental output.

In fact, it has been argued that if rural youth, ostensibly working on overcrowded farms, get the opportunity to move to other sectors and find work, the productivity of Indian farms could actually go up. But there lies the rub. Where are those alternative jobs? India’s Prime Minister, Mr Narendra Modi, and some of his ministerial colleagues have often stated that India’s youth have opportunities galore in the informal sector—to be small entrepreneurs who are self-employed. Those are facetious statements, designed more to divert attention from the real problem of unemployment than to alleviate it. Otherwise, how does one explain the phenomenon of post graduates and graduates applying in thousands for menial posts such as that of a government department’s peon or a municipality’s sweeper?

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Yet, there may be a kernel of an idea for employment generation in those statements. If the finance minister, in her Budget, had devised incentives for unemployed youth or other budding entrepreneurs to set up small businesses—through liberal grants of seed capital; subsidised land for building small manufacturing or trading establishments; and facilitation for marketing and distribution of products and services—that could lead to heightened entrepreneurial activities. Such incentives, if properly targeted in the rural and semi-urban parts of the country where agriculture or farm-related enterprises could move the rural sector up the value curve, it could see the blooming of millions of tiny, small, and even medium enterprises. In turn each of these enterprises could generate employment—not on a large industrial scale—but in modest numbers. If a tiny enterprise hires even four or five workers, 10,000 of them could hire 50,000 young people. The multiplier effect of such an initiative is easy to conceive.

To be sure, Mr Modi’s government, in its first term (2014-19) flagged off many well-publicised schemes: Skill India, which was aimed at re-skilling young Indians; and Startup India, aimed at handholding and helping entrepreneurs to set up enterprises. None of these has attained the levels of success that were envisaged or promised. If such programmes are conflated into comprehensive opportunities for fresh Indian graduates from schools and colleges and offered to them as they finish their education, particularly in rural and semi-urban India but also in urban areas, they could not only be opportunities for unconventional employment but also serve to build small enterprises by young entrepreneurs that could further employ other young people.

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Some of this is happening informally. But the need of the hour is for India’s government to formalise such activity and make it a widespread movement. The definition of a budget is to balance spending and earning; but in India, budget-making could also be the opportunity for governments to think out of the box and create something that could address what is perhaps the country’s biggest issue—a burgeoning population of young people but a diminishing prospect of finding employment for them. India’s youthful demography is unique. Nowhere in the world are there as many young people as there are in India. The strategy to find opportunities for them has to be equally unique. The Budget for this year offered a platform that could have been used to do just that. Sadly, that opportunity was missed.

NYAY – ‘Create Jobs, Avoid Freebies'

Arup Chatterjee, 34, a business development consultant from Bhopal, who worked in the UK for four years, believes India can learn from the British social security schemes. He warns that handing out freebies like NYAY will only make them dependent on the state; the solution lies in creating more jobs.

I lived and worked for almost four years in the United Kingdom and came back in 2015. In these few years, I have been able to observe how both the countries help their poor. Unlike the UK, India took a long time to cope with the after-effects of colonization. As a result, both socially and financially, India remains backwards. However, now it is time to put an end to this, and that can be brought about only through a change in mindset.  

In case of populist schemes like Congress’ Nyuntam Aay (NYAY), I feel they are a way of giving handouts to people, which in turn, makes them lazy. India has a huge population of beggars, who would remain beggars and will have no motivation to work if they get money from the government. Thus, I don’t have high hopes from the as of now.

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The people who could benefit from such a scheme are the ones who work in India’s unorganised sector. Demonetization dealt a severe blow to these people and rendered them jobless. But I guess they won’t be covered under the NYAY scheme as they don’t belong to the poorest 20% of the population. Rahul Gandhi should look at addressing the problem of the unorganised sector as a whole. I have heard that he has talked about filling up 22 lakh government job vacancies within a year, if voted to power. 

Social security schemes for all sections of society in the UK are well-structured and India can learn a lot from it. However, I have seen many people turn lazy in the UK because the government supports them so well. We Indians generally don’t follow discipline, for e.g. standing in lines, but when it comes to freebies, ‘mamla air bigad jata hai aur log uspe toot padte hain’ (things get worse and people will go up to any extent to avail them). We need a social change where people understand that the government is there to help you only after you have tried to help yourself — himmat-e-mard madadan khuda (God helps those who help themselves).  

Whichever government comes to power, it must think about job creation and addressing unemployment. Women are more financially astute and they should more involved in such policy that would require large sums of money to be taken out from the exchequer.

The BJP government had also launched the PM-KISAN Samman Nidhi Scheme, which gives ₹2,000 every quarter to farmers owning agricultural land of less than two hectares. This is quite low in comparison to ₹6,000 per month, but BJP knows how to advertise its schemes better, while Congress/Opposition doesn’t. 

I also read that NYAY is expected to cost the exchequer ₹3.6 trillion or around 1.7% of the forecasted gross domestic product (GDP) for 2019-20. However, former Finance Minister P. Chidambaram has said that the cost will never cross 2% of the GDP. 

To put less burden on taxpayers, Congress is thinking about doing away with some subsidies as well as sharing the cost with state governments. Let’s see if it works, though I don’t have high hopes. 

Last time if I had got the chance to vote (because I was in the UK then) I would have voted for the BJP. However, this time despite seeing the tremendous infrastructural development around me, I am still to make up my mind whether to vote for it or not.

I am doing a lot of research before casting my precious vote and taking note of all facts and figures related to socio-economic development. Our city, Bhopal is known for communal harmony, but BJP is known for its divisive tactics and that is disturbing. I have seen people from all cultures coexisting peacefully during my stint in the UK and we need to bring back the thought of ‘unity in diversity’ in the mainstream to be happy as a country.

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#MyVote2019 – 'Bad Rule But Good Oratory’

Priyanka, 41, Beauty Parlour Owner, Jharkhand   If you have a pretty face, makeup is inconsequential; it just enhances your beauty. It is like the icing on a cake. If the base of the cake is well-baked, you will have a delicious cake. If we apply the same logic to our current government, then our Prime Minister’s oratory skills are just an icing on a badly baked cake or makeup for ugly governance. The decision to reserve 10 percent of jobs for upper caste poor too, I feel, is a way to cover up for five years of bad governance. I firmly believe in merit and people who have courage and self-belief do not need any kind of reservation. People who lack confidence, will always be needing something more, no matter how many incentives they get. But I do believe that there are people in very remote areas who don’t have access to good education, they should definitely be helped in getting access to good education. Coming back to bad governance… I have overcome many a tough situations in life, but demonetisation perhaps posed one of the toughest challenges for me. Oh! those long queues at the banks and the uncertainty of whether I will be able to withdraw money after the wait! Demonetisation happened bang at the beginning of the wedding season. Beauty parlour owners like me wait all year round for the wedding season since it is the most lucrative period for us. I am not too upbeat about the Goods and Services Tax (GST) either. Maybe in big cities, people don’t mind paying more after GST was introduced, but women in small towns are not at all ready to shell out extra bucks.  Even if you tell them that the charges of services like manicure, pedicure, waxing etc. have gone up because of GST. In the 2019 election I would like to vote for a candidate who understands both microeconomics as well as macroeconomics. Or at least tries to learn about them and open to other dissenting views. However, there is a marked difference as far as cleanliness is concerned. Things are definitely getting better in the heart of the town. But I get disheartened, when I see that garbage is still being dumped on the outskirts of the town. The concept of recycling is still alien to most people here. My tip to Narendra Modi: Since people feel so connected to him, I think he should have a Chai pe charcha at the end of his tenure and this time he should take feedback from people to ensure good governance. (The narrator did not wish to share her photograph. The images used are representational)]]>