July , 2019
Where does the budget stand on employment?
17:45 pm

Shinjini Mukherjee

According to a leaked draft report by the Periodic Labour Force Survey (PLFS) of the National Sample Survey Office (NSSO), the unemployment rate in the country in the Financial Year (FY) 2018 amounted to an overall rate of 6.1%, an all-time high in the last 45 years. Data published by the International Labour Organisation (ILO) showed unemployment had risen from 3.4% to 3.6% from 2009-14 to 2014-19. The Centre for Monitoring Indian Economy (CMIE) said in a report that the number of unemployed persons rose by nearly 11 million, following the implementation of demonetisation in 2016. Although widely disputed, according to the Government of India (GoI) sources, India had 31 million unemployed people in 2018.

The most prevalent criticism thrown against the Modi Government in its previous tenure was its perceived jobless growth. It was expected that a key area for the Budget 2019 will be that of employment generation. Development of labour intensive industries should have been the main objective.

Lack of focus on unemployment

Yet, Finance Minister Nirmala Sitaraman uttered no word on the employment scenario in her two-hour budget presentation. There is no effort on job creation in the Union Budget of 2019.  The budget is said to have been made with a ten year vision in mind. It aims to reach a five trillion dollar economy target by 2024. It is expected to become a three trillion dollar economy in 2019 itself. Yet, there is no attention on employment generation in spite of the fact that Sitaraman claims that her maiden budget has gaon, garib and kisan in its core. N.G. Khaitan, Vice President, Bharat Chamber of Commerce, told BE, “There is absolutely nothing in the budget that might improve the unemployment condition in the country.”

Agriculture is still the single largest employer in the country. To encourage traditional activities and agriculture in rural India, schemes like the ‘Scheme of Fund for Upgradation and Regeneration of Traditional Industries’ (SFURTI) has been promised. The budget also promises to invest in agricultural infrastructure which might create some sort of employment in the agricultural sector indirectly. However, there is a high rate of disguised unemployment, especially in agriculture in India and the cultivable land available is unlikely to go up. These factors question any possibility of increasing employability in the agricultural sector.

In the segment of the budget that relates to the urban sector, there is a promise of enabling about 10 million youth to take up industry relevant skill training through the Pradhan Mantri Kaushal Vikas Yojana (PMKVY). This might create a large pool of skilled labour but will be of no avail if employability is not increased.

There is a great emphasis on start-ups in the recent budget. Sitaraman seems to place great faith on the profitability and employability of start-ups and the government proposes to continue with the Stand-Up India scheme. Start-ups, 

however ,exit the market as easily as they enter. They are highly unreliable, especially in terms of generating employment opportunity. Yet this is the only solid programme that the budget offers for enhancing employability in urban India.

The budget, recognising the importance of women in the development of the economy, has proposed to expand the Women Self Help Group (SHG) interest subvention programme to all districts.  There is however no further detail on how the policy will be implemented. The government has allotted the Ministry of Labour and Employment `10434 crores in 2019-20 against an average annual allocation of `5957 crores in each of the five years from 2014-19. This is a major achievement but it is still unclear how these funds will be utilised to increase or create employment.


There is no word on creating employment directly and with the direction provided by this budget, there is very limited possibility of creating unemployment indirectly. Tax rate for companies which have a turnover of more than `400 crores have been slashed to 25% but according to relevant sources, key players in this category expected a larger cut. These are the companies which contribute largely to the Indian economy. They are also the highest employers in the country. The high tax rates may affect employment adversely in this regard. It is high time Modi 2.0 recognises the employment crisis.

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