View: What this Budget can offer to fix India's unemployment problem
India’s employment situation is bad. The current unemployment rate is the highest in the last 45 years. The unemployment among urban youth (age 15-29 years) is alarmingly high at 22.5 per cent. The high unemployment rates is but just one of the problems with India’s employment scenario. The labour force participation rate has come down to 46.5 per cent for those who are 15 years and above. A large proportion of the employed workers get low wage and are stuck in ‘employed poverty’ trap.
While structural factors are responsible for the high unemployment rate, the current slowdown has made things worse. There is enough evidence to show that the economic slowdown is a result of the decline in demand (investment and consumption). Aggregate investment has fallen below 30 per cent of the GDP, a rate much lower than the 15-year average of 35 %. More recently, private consumption has also declined. Unsurprisingly, capacity utilisation in the private sector is down to 70%.
Therefore, as a first thing, the budget should focus on reviving demand. Rural India — especially the small and marginal farmers, the landless labour — spends most of its income on a wide range of goods and services. So, an increase in disbursements through PM-KISAN and MNREGA can provide much needed boost to demand. In the medium term, rural unemployment can be reduced through enhanced go nment spending on irrigation, rural roads, cold storage, and logistical chains crucial for integrating farms with mandis. These facilities along with an extensive crop insurance can drastically raise agricultural productivity and income.
Another major reason behind the unemployment situation is GST-caused distress among small and medium enterprises (SMEs) who employ more than 11 crore people. GST has generated inverted duty structure (IDS) for many products whereby the tax on raw materials is higher than on the finished product. Such an imbalance reduces competitiveness of SMEs and increases cost of capital for them. Annually, around Rs 20,000 crore gets stuck with the go nment in the form of input tax credit. The tax has raised the cost of doing business for SMEs that act as agents of other businesses. In addition, GST on exports of intermediary services reduces their competitiveness. These anomalies in GST need to be addressed without delay.
Decline in construction and related activities in urban areas is a serious concern. These activities employ more than 5 crore people. The budget should aim to revive construction activities in real estate and infrastructure sectors. These sectors directly or indirectly support economic activities in another 200 odd sectors.
In this regard, the National Infrastructure Pipeline (NIP) programme is a welcome step. It aims to boost aggregate investment to the tune of 2-2.5 % of GDP by investing Rs 102 lakh crore in infrastructure over next five years. As much as 39 per cent of the funding is expected from the states and another 22% from the private sector.
Unfortunately, many projects are stuck due to various regulatory hurdles, and many others are mired in legal disputes. Regulatory uncertainty makes private investment unnecessarily risky and is the major reason behind non-availability of capital for infrastructure and other projects. The go nment should realise that for private investment, the regulatory certainty is as important as the cost of capital.
Another important source of employment is housing projects. Here, too many projects are caught up in disputes — contractual ones between homebuyers and developers, and legal ones between lenders and developers. To make things worse, such disputes are simultaneously taken to multiple authorities — the RERA, NCLT and Consumer courts. Consequently, restructuring and liquidation processes have got delayed.
Finally, to reap the demographic dividend, there is a need to invest in skilling of the youth. In future most jobs will come from the private sector that prefers candidates with practical skills and work experience. However, a common perception is that it takes a college or university degree to get a good job. This misperception is the result of lack of an adequate and affordable vocational and education training program in the country.
In the interim, the go nment should fill the large number of vacant posts. Estimates suggest that there are more than 22 lakh vacancies in go nment departments. The country can ill-afford this neglect at a time when the unemployment rates remain very high.
译文来源：三泰虎 http://www.santaihu.com/49255.html 译者：Joyceliu
If by any chance, Purchase Power of Farmers of India can be Enhanced, by creating a Full Proof Agricultural Marketing Infrastructure, then Jobs for Millions can be created in Rural India .
Sri Rama Sarma Yadavally
All are good suggestions but whether the go nment has really the resources to undertake these measures with the fiscal deficit targets and other concomitant constraints.
i failed to understand if there is real unemployment or not. go nment data states otherwise, creation of 20 lacs jobs in one month. there might be normal unemployment only.
There is no solution to this except for Indians making new companies. India cannot compete against China, Korea and Japan and it does not have leading edge in IT like U.S. does. Therefore govt can't do anything really.
Main issue is not skills but hard work looking for free quick fixes and miracles.
COMPULSORY POPULATION CONTROL LIKE CHINA MAINLY OF THOSE WHO BREED LIKE COCKROACHES AND TERMITES THESE PEOPLE IF HAVE MORE THAN TWO CHILDREN THEN NO SUBSIDIES AND FREEBIES AND DOLES AND ALMS OF ANY TYPE FOR THEM..
population control best way to boost employment
anti modi media hype only
Import from China by on line sell is hurting Indian manufacturers and traders. Automated manufacturing plants and import of food items are adding problems. UPA and NDA both failed to generate employment. There is no strategy in place to reverse the trend.
Ban Bollywood Movies
All jobs are being automated away. Poor are still producing growing population... From where will Modiji provide jobs to all. Better 1. control population of the poor. 2. Provide basic housing for all. 3. Stabilize cost of other things like food, clothings medical treatments etc. This will improve the situation.
DON'T EXPECT WONDERS FROM THIS BUDGET...... THEY ARE ABLE. TO MANAGE THEIR COFFERS HOW CAN THEY HELP JOBLESSNESS......POOR YOUNG DREGREE HOLDERS STUDENTS RUN FROM CORNER TO. CORNER BEGGING JOBS......
Unemployment is becoming a big issue which needs to addressed seriously.
you seem to think military men have impeccable morals and ethics.These are very corrupt and violent men in uniform.Giving control of our children to them will be dangerous
Investors can be rewarded in terms of money, opportunity and time. Investors would be interested if they can make money immediately, or they have opportunity to make money is some reasonable time or if they are allowed to pay back after a considerable time. I think we should explore all these dimensions.
I would also sincerely request the Union Budget to focus on constructing More Judicial Courts to address the common people's problems. I hope this could bring peace to many people's lives. Separate Courts to Civil & Traffic, Criminal and Corporate courts access to people.
shutting down courts might work even better. Judges and lawyers are in this to earn huge bribes from indians. except criminal cases, nothing more is required in india.
Dear Ram Singh,The ideas presented here is very good, I would like to get the opinion of top 20 economists on your article and the consolidated one should be presented to the Finance Ministry.Regards,
Pay Commission must have recommended to cut down go nment staff and improve efficiency of working. The vacancies of some 22 lakhs existing now should not be the result such action.
The go nment should simply close itself down. Indians will automatically create jobs to suit themselves. It is the go nment interference that is the problem.
Govt should focus on improving the job sector on a priority basis. unemployment is the biggest concern right now.
The intent & spirit of the author is genuine to the ultimate scales. However, the authorities involved need evaluation and introspection.The budget document is all ready to be declared on 31st Jan or 1st Feb; which will decide the fate of Indians to live or live happily ever after. Sometimes it is difficult to understand how these intellectuals decide for the entire nation which is hungry for wellbeing not just materially but also a peaceful life. When is that possible India?
He has talked about GST having inverted duty structure. I would disagree. The way GST was structured was to have the same duty / tax as existing.
regulate imports. import only whatever we cannot manufacture. this will increase local production and more people will get jobs. Cheap imports are killing local industries. It will be very sad if youth do not get jobs, they will easily get disappointed, so do something on immediate basis to give more employment
Rather focus should be export promotion. If we are competitive in export imports will go down automatically.