Budget 2017: Roadmap to create one crore jobs a year still missing

The word “job” was mentioned by Finance Minister Arun Jaitley about half a dozen times in his Budget speech on Wednesday, but there was no real target mentioned or a clear roadmap on how to create more new jobs. With demonetisation having hit industries hard, there has been a high rate of retrenchment, especially in the small sector. Leave alone hiring new people, industry has been struggling to even retain existing employees—and industry feels the budget missed that point and was only incentivising those who were unaffected.

“The main issues facing India today is jobs for the youth and farmer welfare. On those fronts, there was nothing,” Congress Vice President Rahul Gandhi told reporters in the Parliament compound.

There were some interesting proposals though. On the job creation front, the Finance Minister announced that the Centre would pay the Employee Pension Scheme contribution of 8.33% for all new employees enrolling in EPFO for the first three years of their employment. “This will incentivise employers to recruit unemployed persons and also to bring into the books the informal employees,” said Jaitley. Also, the scope of Section 80JJAA of the Income Tax Act that allowed a manufacturer of goods to claim 30% of additional wages paid to the new regular workmen, has been expanded to include all that come under that Act.

“We welcome these initiatives. But, there’s a fundamental problem. Considering the present scenario after demonetisation, how will this help companies—especially the MSMEs—that have been severely hit?” said KE Raghunathan, National President of All India Manufacturer's Organisation (AIMO).

The small-scale sector, Raghunathan said, that makes up 30-35% of the country’s total employment has been “suffering without making any profit” and consequently has been retrenching jobs, post-demonetisation. “The Budget instead of bailing out the suffering is providing incentives to those prospering. How will this help in creating jobs?” The focus of the Budget should have been on “stopping retrenchment”, through steps such as providing enhanced cash flow and restructuring of NPAs (non-performing assets) of the small sector firms, which were a result of demonetisation.

The FM also spoke of the National Career Service that was launched in July 2015. “Already 35 million jobs seekers have registered on this platform. We propose to make 100 Model Career Centres operational by the end of 2016-17,” he said.

But, the point is, how is that helpful in creating jobs? The Economic Survey released yesterday quotes the Labour Department’s figure of only 1.35 lakh jobs being created in 2015.

Though Prime Minister Narendra Modi’s pre-election promise of creating one crore jobs a year has become a distant dream, much was still expected from the Budget on job creation. That hasn’t happened.