Even as its overall economic heft grows, unemployment continues to be a major worry in the world’s most populous country. According to the World Bank, India’s employment rate has indeed shown a positive trend in recent years, with its growth outpacing the increase in the working-age population. However, large regional and demographic variations persist in the labour market. The recent move by the central government to launch an employment-linked incentive scheme with an allocation of ₹99,446 crore aims to bridge some of the gaps.
Recently cleared by the Union cabinet, the scheme aims at skilling young Indians and providing them fresh opportunities, apart from formalising more of the workforce and bolstering social security. The goal is to create over 3.5 crore formal jobs over two years, of which nearly 2 crore will be entrants to the workforce. Among these first-timers, employees will be eligible to get up to ₹15,000 deposited in their provident fund accounts. On the other side, employers will be given incentives for up to two years for generating additional jobs, with the benefits extended for another two years for the manufacturing sector.
States such as Tamil Nadu have already floated ELI schemes as part of their social welfare measures. TN’s innovative scheme involves incentivising the employment of women, the differently abled and transgender persons in manufacturing. The idea is to promote inclusive economic growth and empower marginalised communities by bringing them into the mainstream.
Similarly, the Centre hopes to catalyse job creation in all sectors besides incentivising the youth join the formal workforce. Bringing social security cover for scores of young men and women in the country is a welcome corollary. If implemented at pace across the country, the scheme has the potential help build a more robust and inclusive workforce, especially while helping socially and economically vulnerable households. The government will have to keep a close watch on the scheme’s alignment with global industry trends, entrepreneurship, innovation and sustainability. It needs to ensure the public funds go to deserving companies that reinforce the basic idea of inclusion and welfare. At the same time, it should bolster vocational training and digital literacy to leverage the latest technological advancements. The target should be to herald long-term economic stability for employees.