Unemployment Puzzle: The Most Important Yet Neglected Sector

Press Release

Fiza Mahajan

With the recent cuts in several social security schemes for workers and with the allocation to the Ministry of Labour and Employment dropping from ₹16,893.68 crores in the last budget to ₹13,221.73 crores in the current budget, it seems that the problem of Unemployment has taken a backseat in the recent budget of 2023-24. 

To simplify and clarify the situation on the prospects of job creation and employment-unemployment debate, an interactive panel discussion on the topic “Employment, Livelihoods and Union Budget 2023-24” was conducted on 4 February 2023 after the announcement of the recent budget on February 1st, 2023 by IMPRI Impact and Policy Research Institute, New Delhi’s #IMPRI Center for Work and Welfare (CWW), under the IMPRI’s 3rd Annual Series of Thematic Deliberations and Analysis of Union Budget 2023-24, as part of The State of Employment and Livelihoods- #EmploymentDebate.

At the outset, the chair for the program Prof Krishnaprasad, Former Associate Professor and Head of the Department of Economics at Elphinstone College, Mumbai, contextualized the Budget presented by giving an overall state of the Indian economy in the backdrop of a pandemic that shook the entire world. She pointed towards the onerous task of assessing the performance of the recent budget considering its focus on long-term projects which are generally spread over the years. In her words, the budgets from the past few years were becoming more like a rolling plan rather than an annual budget.

“Announcing, one and not having enough funds, on the other hand, is revealing the content and the intent” was the way Prof Krishnaprasad put forward the divergence in the government’s set objective and the means required to achieve it. Her main concern about the state of the Indian economy was stemming also from the dearth of data, with the last census data available for the year 2011-12, which is the basis of most of the policies. There’s no doubt that using decade-old data to frame policies in the current changed context is a troubling fact to digest and it is only reasonable to be worried about the results that the new policies will bring forward.

Prof Krishnaprasad continued further talked about how the recent budget missed mentioning the Production Linked Incentives Scheme (PLI) which was supposed to take India’s economy to the next zone. She mentioned the lags with the PLI Scheme which failed to provide adequate incentive capacity to the industries for their final value addition. Carrying the discussion forward Mr Sandeep Chachra who is the Executive Director of Action Aid Association, India and Ex Co-Chair of World Urban Campaign, United Nations (UN)-Habitat talked about the budget expectations of the public. He focused on three main points as stated in the Budget.

The first one was the Abolition of Manual Scavenging, which he welcomed, however, he stressed that this transition from manhole to machine-hole should have been aided with schemes for the manual scavengers to find self-employment. The second point that he talked about was the saturation of all the settlements of the Particularly Vulnerable Tribal Group (PVTG) with housing, roads, and sanitation facilities. He said although this was a step in the right direction, there still remained the question of the de-notified tribes, semi-nomadic tribes, and pastoral groups who comprise about 13-14% of the population of India.

According to Mr Chachra, a percentage of budgetary outlay in a focused manner should have been given to these communities. The third point he was excited about was Finance Minister’s announcement to provide support to undertrials and prisoners who have been languishing in jails for a long time and do not have the resources to carry out long trials. However, Mr Chachra was sceptical of the reduced National Rural Employment Guarantee Act (NREGA) funds in the recent budget and said that he was expecting much larger public spending on the employment generation front.

Talking about the problem of unemployment Mr Udit Misra, Deputy Associate Editor, Indian Express, stated “I argue that unemployment rate is the wrong way to go about assessing India’s Labour Market stress and we should look at the employment rate in India’s case because the Labour Force participation in India i.e., the denominator while calculating the unemployment rate has been falling. People have been pulling out of demanding work because they are discouraged”. Based on his observation of Centre for Monitoring Indian Economy (CMIE) data that fewer women were employed in India in 2017 as compared to 2004, he referred to it as scary statistics.

Further talking about what was mentioned in the economic survey about ‘the employment levels being risen in the current financial year and job creation having been moved into a higher orbit with the initial surge in exports’, he pointed towards the contrast between the ground reality and the what is presented on part of the government. He also lay bare the macroeconomics topic as were mentioned in the budget including Fiscal Prudence, Capex, Gross Domestc Product (GDP) and Inflation, and Revenue Projections. Raising a perturbing point, he stated “Revised Estimates rarely get the headlines that they deserve”. Talking about Capex he mentioned the government switching its expenditure from revenue to capital and welcomed the move.

However, he also mentioned that it is betraying some really sad reality of Indian growth by pointing towards the lack of investment done by the private sector. “We have a lovely idea that we are following but maybe misapplied” were his remarks while ending his talk.  Dr Sonia George, Secretary of Self Employed Women’s Association (SEWA), Kerala praised the Saptarishi program but questioned who is going to be the sufferers of this increased capital expenditure that is being financed. She also questioned the 14% cut from 126 crores to 114 crores in the funds for the National Rural Livelihood Mission which is the basis for the economic empowerment of rural women through self-help groups. 

She focused on the gender divergence on part of various schemes where women are denied minimum wages and have to pay more interest on loans from microfinancing. She further brought a worrying point to the forefront of the absence of tools to measure the gender impact of various schemes that are being introduced. While concluding her talk she mentioned the need to analyze the existing capital expenditure regime in the context of social spending and to review the budget from a capital expenditure versus social expenditure perspective.  

Taking the discussion further, Prof Utpal K De, Professor North Eastern Hill University (NEHU) and Visiting Professor IMPRI reminded us that while the discussion on this year’s budget is important, there should be a mandatory assessment of what exactly has been achieved in the previous years. He raised doubts about the digital currency initiative that was introduced last year, however, he also said Ms Sitaraman was right to promote environment-friendly vehicles in the economy. Prof Ranjit Singh Ghuman, Professor of Eminence Guru Nanak Dev University (GNDU), Amritsar, highlighted the various fund slashed for agriculture and rural development schemes like MNREGA which is likely to affect the rural economy. Schemes like Fasal Bima Yojna and Kisaan Samman Nidhi have seen a reduction of funds by around 12%.

He stated that Mahatma Gandhi (MG) NREGA has been targeted for many years now and inferred that these cuts could bring the food security and the employment guarantee of the nation under threat. He also recalled that there was no mention of MSP in the budget, which was a contentious issue between the government and the farmers. Dr Sandhya S Iyer, Associate Professor and Chairperson, Centre for Public Policy, Habitat and Human Development at Tata Institute of Social Sciences (TISS), Mumbai highlighted there was a lack of the vision statement in either the Economic Survey or the Budget which is being touted as the first budget for Amrit Kaal. She said the Budget was more imaginative than visionary. She also wanted the Budget to focus more on the rural non-farm sectors and the MSMEs.

She said she was glad that a scheme like Pradhan Mantri Vishwakarma Kaushal Samman had been started and said this scheme would place the artisans back into a public policy structure, however stating her thoughts further on that she mentioned “Inclusive development is not about stating that everything will be made inclusive but to form a strategy which is more pointed towards it”. Her discussion was based more on the micro perspective which she thought was blatantly ignored in the recent budget. Raising an important point she stated the need to break down the aggregated unit called MSME as Micro, Small, and Medium cannot be clubbed together.

She also talked about the coordination issue of conceptualization while mentioning that the Apprenticeship Program is not linked to the Skill Promotion Program. Dr Iyer concluded her talk by saying “I find some content, a very little intent, and a very dismal approach in the sense when I come to labour”. Her statement showed concern regarding the falling allocation towards the labour market. All the panellists had a common worrying point of reduction in allocation towards the social security schemes which act as a safety net for vulnerable groups. The scraping of this safety net is a cause of concern for an economy like India where a majority of the labour force works in the informal sector with no job security.  

IMPRI 3rd Annual Series of Thematic Deliberations and Analysis of Union Budget 2023-24 | Feb 2- 7, 2023 | IMPRI #WebPolicyTalk

Watch the Event at IMPRI #Web Policy Talk



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