The Survey, which is the government's official report on the state of the economy, attributed this drop to external shocks such as COVID-19 and other geopolitical developments, and asserted that these “shocks and not structural forces have influenced employment”.

The implicit argument is that the government is doing whatever it can to facilitate investment (capital formation) in the private sector by cutting taxes and providing incentives. But the sector is falling short of creating enough jobs. One of the major reasons cited is the slow pace of investment in machinery and equipment and intellectual property products.

Against this backdrop, it was expected that the first full budget of the new government would emphasise job creation and the requisite skill and educational developments.

Private Sector Summoned To Be The Saviour

Three major schemes for employment-linked incentives to encourage the private sector create more jobs were announced.

Scheme A promises a one-month wage to all first-time workers, Scheme B provides incentives directly to employee and employer for their EPFO (employee provident fund) contribution in the first 4 years of employment, and Scheme C proposes to reimburse up to monthly Rs 3,000 for 2 years in EPFO contribution for each additional employee (within a monthly salary of Rs 1 lakh).

The top private companies have also been asked to provide one-year internships to 1 crore youth in the next five years. The monthly allowance would be Rs 5,000. Companies will bear the training cost and 10 per cent of the internship cost from CSR (corporate social responsibility) funds. However, the fine print reveals that participation is voluntary.

Industry’s heavy lifting does not stop here. The government also wants it to be the catalyst in raising women’s participation in the workforce. The budget proposes building working women hostels and creches in collaboration with the industry. The government, in turn, would do its bit by marketing for women’s self-help groups.

Existing skill gaps hinder job creation and the budget naturally progresses into that zone. A new centrally sponsored skilling scheme would strive to skill 20 lakh youth in the next 5 years. Industry, once again, will be one partner – the other being the state governments.

Loan schemes are unveiled for skill and educational development. Model Skill Loan scheme will facilitate loans up to Rs 7.5 lakh, with government guarantee. The target is to help 25,000 students every year.

There is another loan scheme for the youth who are not eligible for any benefit under government schemes. They will get financial support for loans up to Rs 10 lakh for higher education in any domestic institution. The government will directly provide e-vouchers to 1 lakh students each year for annual interest subvention of 3 per cent of the loan amount.

Actual Allocations Subdue Budget Speech Crescendo

The finance minister, in her speech, announced a total provision of Rs 1.48 lakh crore for education, employment and skilling, largely unchanged from what she had provided in the Interim Budget presented in February. 

Allocations in production-linked incentive (PLI) schemes for pharma, food processing, automobile and electronic manufacturing range from Rs 1,500 crore to Rs 6,000 crore. National Rural Livelihood Mission gets slightly larger fund of Rs 15,047 crore, compared to Rs 14,129 crore in the 2023-24 budget estimate (BE).

That leaves the rural bulwark for survival, the MGNREGA scheme, with the largest allocation of Rs 86,000 crore, also the same as the Interim Budget.

Notwithstanding the emphasis, the budget allots Rs 10,000 crore to new employment generation schemes for this financial year.

A similar trend can be observed in education budget allocations. Running schemes are allocated the same amount as in the interim budget. Samagra Shiksha gets the highest allocation, with much smaller allocations in PM-USHA and PM-USP.

The showcase flagship of PM-SHRI gets a larger Rs 6,050 crore but continuing non-participation of some of the opposition-ruled states blunts the efficacy of that allocation.

A very low Rs 2,686 crore Skill India allocation tells another story. The programme did not even take off in the last 10 years, though the initiation was ingrained with same optimism that is now shown in the initial parts of the budget speech. A deeper dive into what went wrong with earlier Skill India could have increased the chances of success in future skilling efforts.

Questions And Doubts Linger

Though the Union Budget tries hard to lean on the private sector to generate employment and enhance the skillsets of young potential entrants into the workforce, some teething questions remain.

While the Economic Survey admits the importance of the MSMEs as the main engine of employment generation, these enterprises – by definition – are not large companies that can carry the weight of interning, skilling and absorbing people in their fold.

Large companies, on the other hand, have to voluntarily opt for all the employment-linked incentive schemes that are announced. It was corporate social responsibility (CSR) funds by which something similar was attempted last time. The results, some may argue, are not discouraging, but not very encouraging either.

It will be unfortunate if this budget's employment and skilling endeavours meet the same fate despite the right intentions.