Ending years of handwringing, the NDA government has finally decided to tackle the issue of high unemployment in the country. Last week, presenting Budget 2025, Finance Minister Nirmala Sitharaman gave job creation the greatest shot of adrenaline, rolling out five new schemes with an unprecedented outlay of Rs 2 lakh crore. The proposed package is expected to facilitate employment and provide skilling for over 4 crore youth over the next five years. The schemes have several moving parts, but broadly, they are aimed at fresh hires, who are being lured with direct cash transfers, and employers, who are rewarded with monthly EPFO reimbursements for two years for every additional employee added to the workforce. Then there are initiatives to incentivise job creation in manufacturing, besides programmes to enhance skilling, women workforce participation, support to MSMEs and others.
Skilling has been one of the biggest problems as our youth are simply not employable. Some 65% of India’s fast-growing population is under 35, but many lack the skills needed, according to the Economic Survey. Shockingly, one in every two coming out of college is not readily employable. Perhaps this is where the Budget’s internship programme comes in handy.
The top 500 companies are given a gigantic task to create one crore internships in five years. By way of support, the government vowed to foot the bill, mostly, but the scheme’s success depends on whether India Inc has the courage to commit. Few believe they will oblige. The other initiative to upgrade 1,000 industrial training institutes in collaboration with states and industry is expected to benefit 20 lakh students, but the scheme isn’t stamped from any nobler metal than existing collaborations.
The other schemes namely the employment-linked incentives are clearly aimed at increasing formal sector employment. As official data showed, India’s informal sector alone employs over 11 crore and this is an area the government is attempting to streamline. Both the cash transfers and employer incentives are linked to EPFO database, but the outcome of these schemes is like forecasting whether a tossed coin will come down as a head or a tail. For, companies simply won’t increase hiring based on financial incentives, but depending on their demand and supply growth projections. In sum, it’s a good start, but as they say, the first pancake is always lumpy and so subsequent budgets must build on these schemes to make them work.