The positive sentiments of growth and development with increased focus on youth, skill development, job creation and business friendly measures gave an unprecedented mandate to the central government in last general elections of 2014. The government in its last nine months of working has been working towards not only raising the standard of living in India but also improving the country’s image in global economic and business ecosystem through various effective steps, laws, and debates. The business friendly measures and ease of working has percolated to the job market with positive and increased hiring estimates across the industries. Whether it is infrastructure development or parking additional efforts on reducing inflation numbers, buzz around rate cuts by the apex bank, or GDP estimates, India growth story is here to strengthen further. However, in this budget the urgent need is to ensure the nation that many of the initial steps taken would be monitored properly to achieve desired results and many more would follow to support them, besides new ones that are needed.
- Make in India: This has been one of most important initiatives of the Modi Government and gave hope in terms of jobs as well as development. The result as already started showing with positive hiring sentiments amongst employers across different sectors including automotive & engineering which were noted to have slowed in recent times.(India Skills Report 2015, a joint initiative by PeopleStrong, Wheebox, and Linkedin in association with CII released in November 2014). Government should now back it up with increased reforms to translate the sentiments to numbers.
- Labour reforms: India has a complex labour law structure with approximately 44 central and 100 state laws that are expected to regulate the labour landscape. Being archaic and having loopholes, many of these laws are biased towards the working population. In order to make “Make in India” a success, the government needs to look into it. For e.g. the Industrial Dispute Act 1947 have very stringent guidelines on lay-offs, retrenchments and closure. This often stops the employers to grow their manufacturing operations in India beyond a certain limit. The benefit regime established often locks almost half of the salary of a low wageworker, making self-employment more attractive for the workers. It would be worthwhile to revisit these guidelines and create a balance between industry and worker welfare in the labour laws. It would be great if the complex framework of central and state legislations is reduced to an integrated legal framework with lesser but effective laws with no redundancy, besides clearly defining the ownership of central and state governments. As the Indian geography and labour market conditions are diverse across different states, their involvement in creating this framework is a must.
- Ease of doing business: One of the major attempts of ‘Make in India’ campaign is to attract foreign investments in the country. While the government has struck the right notes in reaching out to Investors across nations, it is time to keep up the promises made. India ranks 142 amongst 189 economies, in World Bank’s Ease of doing Business Index. Some factors that rank India at this level are complex procedures, multiple regulatory approvals spanning several months, and stringent rules on environmental clearances, and exit etc. The government needs to address the major issue of complex procedures and approvals by providing single-window clearances of projects and fixing due dates for closing each step of the different processes. Another step that the government should take is reducing the complexities and vagueness in the tax framework as evident in the recent transfer pricing case. What every corporate player needs is simplicity and predictability in laws, so that every time they do not go to court of law to decide what is correct and what is wrong.
- Skilling and matchmaking: Approximately one million people get added to the workforce every month and of which hardly 37 per cent are employable (source: India Skills Report 2015). So there is an urgent need to make these candidates job-ready. While initiatives like Skill India is a welcome attempt to provide new skills, the government should focus on improving the quality of various existing programmes with especial focus on general graduate programmes and polytechnics, among others where only one among three graduates are considered employable. Simultaneously, some action should happen on the promise of transforming employment exchanges into ‘career centres‘. This is important to ensure job and skill matchmaking, absence of which would result in another unique problem of the talent conundrum, where India would have both jobs and candidates but both of them would be misfit to each other.
Investment and entrepreneurship: The government in its last budget announced a Rs 10,000 crore as budget for promoting startups. However, some substantial effects are yet to happen in this domain. The government should focus on implementing steps like setting up national accelerators, incubators for startups, to encourage entrepreneurs in the country. Meaningful involvement of state governments would help in accelerating this process.
India is close to reaping the demographic dividend but half of our workforce produces only 15 per cent of GDP and more than 90 per cent of the total workforce is not organized (i.e they earn less, do not get any benefits or job security, etc.). It is thus very important for the government to take the above steps and create an attractive environment for investors and corporates to expand their presence in the country, and at the same time unorganized workforce of the country joins the organized workforce. This is how the move towards a developed India can be made.