Indian Government Pledges Strong Focus on Job Creation in Latest Budget
The Indian government has announced a series of new measures aimed at boosting employment and addressing the long-standing issue of unemployment, as revealed in the recent Union Budget presented by Finance Minister Nirmala Sitharaman. Let’s explore some of these fresh initiatives and understand their potential impact on job creation in India.
Three New Employment Schemes Through EPFO
In her budget speech, Sitharaman outlined three new schemes under the Employment Linked Incentive initiative, which are part of the Prime Minister’s broader package aimed at job creation. These initiatives will be implemented through the Employees’ Provident Fund Organization (EPFO) and are focused on recognizing first-time employees while supporting both the employees and their employers.
- Scheme A: A month’s salary of up to Rs 15,000 will be provided in three installments to first-time employees registered with EPFO.
- Scheme B: Incentives will be given directly to both employee and employer for their EPFO contributions in the first four years of employment.
- Scheme C: The government will reimburse up to Rs 3,000 per month for two years toward EPFO contributions for each additional employee.
These schemes are seen as significant steps toward integrating more individuals into the formal economy and support employers in onboarding new staff.
Investment in Education and Skill Development
The Budget has allocated Rs 1.48 lakh crore specifically for education, employment, and skill development. This massive investment underscores the government’s recognition of the link between education, skills, and employment. Sitharaman emphasized that developing human capital is key to improving economic growth and competitiveness.
Industry experts welcomed this move. Gaurav Singh Parmar, Associate Director at Fincorpit Consulting, stated, “The allocation is timely and significant, especially given India’s demographic dividend and the fast-changing nature of jobs worldwide. This holistic strategy of linking education with skill-building and employment support could accelerate India’s transformation into a knowledge economy.”
Support for Internships and Training
To further enhance employability, the budget proposed creating 1,000 training institutes and providing internship opportunities for 10 million youths in top 500 companies over five years. Additionally, an internship allowance of Rs 5,000 per month and a one-time assistance of Rs 6,000 will be given to these interns.
Focus on MSMEs and Startups
Another significant measure is the reduction in the corporate tax rate for foreign companies from 40% to 35%, and the abolition of the “angel tax” for startups. These changes are expected to make India a more attractive destination for both foreign investment and innovation. Ashish Aggarwal, Director at Acube Ventures, noted that the government’s decision to refund up to Rs 3,000 per month for two years for EPFO contributions for each additional employee is a game-changer for employers and job seekers alike.
“This step does double duty by incentivizing companies to increase their workforce, leading to massive job creation, particularly in MSMEs and startups. For workers, this guarantees social security from day one,” Aggarwal said.
Tackling Unemployment
Employment remains a challenge for the Indian government. The country’s unemployment rate surged to 9.2% in June 2024, according to the Centre for Monitoring Indian Economy. The new measures aim to mitigate this by attracting fresh graduates into the workforce and training 2 million young people over five years. These steps also emphasize retaining staff by supporting both employees and employers through financial incentives.
Broader Economic Goals
Besides job creation, the Union Budget also focuses on fiscal prudence and infrastructure development. The fiscal deficit target has been reduced to 4.9% of GDP for the financial year ending March 2025. The government intends to balance welfare schemes with fiscal discipline, making capital expenditures a priority. Significant investments will continue to be made in urban development, particularly in states with strong political support for the ruling coalition, such as Bihar and Andhra Pradesh.
Overall, the Union Budget 2024 marks a concerted effort by the Indian government to tackle unemployment and foster job creation while maintaining economic stability. By linking education, skills development, and employment support, the budget aims to build a more resilient and skilled workforce, contributing to India’s long-term economic growth.
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Mehek