Blueprint sans details

The Budget for 2024-25 has been presented in the Parliament and is drawing mixed reactions. Of course, many of the reactions are based on the political affiliations of the person concerned. This was a Budget that people were looking forward to as it would indicate the development roadmap for the country that the new government had in mind. A large portion of the Budget is a continuation of the past, yet there is also a lot in the Budget that is new. The voters in the recent elections have voiced their concerns, and the government has at least shown that the message has gone home. The Budget has identified nine priorities: productivity and resilience in agriculture, employment and skilling, inclusive human resource development and social justice, manufacturing and services, urban development, energy security, infrastructure, and innovation, research, and development. There can be no debate on these priorities as these are the areas that need reforms, resources, and good governance if India is to continue on its growth path and aspire to become a developed nation at the earliest. Yet, one cannot help but feel that these are honourable statements of intent, but the roadmap or structure to achieve these is missing.

The biggest concern facing the country today is that of unemployment and poor quality of employment. The latter is responsible for low productivity and stagnation in real wages, particularly in rural areas. 83 per cent of the unemployed workforce consists of youth. In particular the level of unemployment is going up with the more educated a young person is becoming. The highest unemployment is among graduates. This is evident by the vast number of young boys and girls applying for any government job that is advertised. The resentment shown by the youth who are protesting against an epidemic of paper leaks is a manifestation of the seriousness of the unemployment issue. In the recent past, the Central Government has been in denial about the existence of the problem and has been quoting selective data to show that the unemployment rate is very low. The ministers, officers, and economists of the Government of India have conveniently overlooked the fact that most of the increase in employment is in the agriculture sector and consists of self-employed people, including unpaid workers. In any case, the issue of unemployment should not be buried under a whole lot of statistics and data sets. One only has to move among the people to feel their anxiety and frustration to understand the immensity of the problem.

Fortunately, by listing employment as one of the priorities, the Budget has at least recognised that a serious problem of unemployment exists. However, the solutions suggested do not inspire confidence. They seem to touch the problem at its periphery, and one is unsure about their actual impact on the level of unemployment. The apprenticeship scheme is not a bad idea, but it is likely to run into implementation bottlenecks. Also, future employability of interns will depend on the kind and quality of training that industry will impart to them. The other two schemes regarding the government paying the EPF of employees for two years at Rs 3000 per month and payment of one month's salary of employees up to Rs15000 are unlikely to incentivise the industry to hire more employees. The industry today is becoming more and more capital-intensive in order to achieve higher productivity and lower costs. None of the proposed incentive schemes seem to have enough muscle to offset the gains that industry gets by substituting labour with capital. Skilling 20 lakh youth in 5 years appears to be much lower than what is required, considering that according to the economic survey, India needs to create 78 lakh jobs every year to cater to those entering the job market. The problem of unemployment is of such a huge dimension that it calls for a frontal assault instead of these piecemeal and scattered incentives proposed. The minimum that could have been done was to enhance the number of days of employment and wage rate under MGNREGA and consider having a scheme on similar lines for urban areas. The PLI scheme could have been amended to incentivise not only production but also the creation of additional employment.

India cannot become a developed nation without the agriculture sector leading the way. The main demands of the farmers for a legal guarantee for MSP and their indebtedness have not been addressed in the Budget at all. A lot of well-intentioned statements regarding agriculture have been made without any concrete steps to raise agricultural productivity, increase research and development in agriculture, and develop and network agricultural markets. It seems that having been forced to take back the three new agricultural reforms due to their not being accepted by the farmers, the Central Government is now fighting shy of considering structural reforms in the agriculture sector. Of course, reforms require taking all stakeholders on board. The rural economy has not been given any significant increase in allocation in the Budget.

The MSME sector is vital because it contributes the most to employment after agriculture. The Budget once again prioritises the MSME sector but does not offer a tangible roadmap for its development. 99 per cent of the MSME sector is micro in nature and is largely in the informal domain. This micro sector, which is responsible for 97 per cent of the employment under MSME, is not able to take advantage of the credit guarantee scheme proposed in the Budget. Having a special bank for MSMEs would have been a good idea, as, in reality, this sector faces a lot of challenges in obtaining credit from the existing system. Furthermore, the issues of technology, marketing, and delayed payments need urgent attention if this sector is to fulfill its potential.

To fully reap the demographic dividend, the education and health sectors needed new initiatives and a much higher allocation than what has been provided. The quality of education from primary to higher levels is abysmal, but the Budget has not suggested any project to improve the quality in a mission mode. Universal quality health coverage is still a distant dream. The Budget speech has delineated both education and health as priorities, but not enough appears to have been proposed in this direction. Also, the scourge of malnutrition does not get the attention it merits.

It is indeed heartening that India is the 5th largest economy today and is growing at a fast rate. However, the low per capita income of the country must trouble the policymakers, and a long-term strategic response is required for this. The Budget does not give any indication of this, though it may be too much to expect from an annual Budget exercise.

To conclude, the Budget has at least shown awareness of the challenges faced by India and prioritised key areas. However, neither the Budget speech nor the allocations indicate that these issues are being tackled. I only hope that future Budgets will come out with a more concrete roadmap to make India a developed nation.

The writer is an ex-Chief Secretary, Govt of Uttar Pradesh. Views expressed are personal