Budget 2019: Putting job creation into the next gear
There was an air of despair around employment in India in the last 12 months. The unemployment rate exploded to 7.4 percent in December 2018, according to a recent analysis by Centre for Monitoring Indian Economy (CMIE). The analysis recorded this to be the country’s worst unemployment rate in the last 15 months. With the count of the unemployed rising further by 11 million, and many new graduates now also ready to be absorbed as employees, the 2019 budget is expected to answer several questions around job creation.
In this article, we discuss the events that are building up to the budget, the major talking points (on the subject of job creation) in the budget, and what can people hope for and what changes could this budget introduce.
Key events leading up to the budget
- Very high unemployment rates, particularly in government jobs
It is not only the rising unemployment rate which is a worry, it is the fact that central government jobs have been hit the hardest. The projected hiring targets have never been met by the central government for a few years now. For instance, the government has been projecting the hiring of 2 lakh more human resources every year. The projection this year is 2.5 lakhs. Having said that, the number has anything but come down.
The number of central government staff has come down by 75,000 in the last four years (since 2014), and there are so many roles still vacant after retirement of professionals.
- 10 percent reservation for poor among upper caste
The Union Cabinet, to much public debate, has approved 10 percent reservation for the economically weaker section in the society. The eligibility of individuals who fall under this 10 percent has come under much scrutiny. If an individual belonging to the general category, earns less than 8 lacs per annum, has less than 5 acres of agricultural land and owns a residential plot below a certain area, then (s)he is eligible for the quota. This would mean that approximately 80 percent of the people in the general category would be eligible for this promotion.
- Lack of hard data on jobs and employment
The National Sample Survey Office records employment data, whose reports haven’t been released by the Ministry of Labour and Employment. People Matters, in a special feature on job creation in India referred to the Ministry of Labour and Employment’s ‘Quarterly reports on changes in employment in selected sectors’. That article, written in April 2016, recorded the last reported official data on employment-unemployment in the country.
The Labour Bureau hasn’t recorded any data on the subject since the last report came out in 2016. A lack of visibility on the actual scenario has been a major talking point as we approach the deadline for the presentation of the budget.
- Farm loan waivers, but missing reforms
A common promise of all the political parties in their electoral mandates the past year was waiving off a major proportion of the farmer loans. The newly-elected Congress government in Madhya Pradesh, Rajasthan and Chhattisgarh legislative assemblies did it; loans were waived off in Maharashtra as well. However, experts have labeled this as mere bandaging the wound, not curing the injury. With an absence of true reforms, the agriculture sector can neither absorb more people and provide more employment nor get rid of disguised and seasonal employment.
Expectations from the 2019 budget
- Vacancy fulfillment and job creation in the central government
A big expectation going closer to the budget presentation date is that efforts would be taken to fill the ~2.5 million vacant positions in central government ministries, departments, and public sector undertakings. There is a lack of teachers in government schools; public healthcare sector is missing doctors, nurses and support staff; etc. Filling these positions alone would help in absorbing so many eligible working population into the organised sector.
The government has hinted at creating more jobs specifically in central paramilitary/police forces (from 10.24 lakhs to 11.25 lakhs), direct tax department (from 45,000 to 80,000), indirect tax department - customs and central excise (54,000 to 93,000), Ministry of Information and Broadcasting and the foreign ministry.
Realistically though, it might be a huge challenge for the government to both fill vacancies and create jobs. As trends have suggested, the central government has been trimming down on the workforce and optimizing its resources. For example, in 2017, Indian Railways, the largest employer, cut down on 23,000 jobs in 2017. And the 2018 budget hadn’t projected an increase in the number of employees in railways. So there may as well be a situation wherein most of these positions remain vacant as the government possibly is trying to optimise its resources.
- Focus on growth
An indirect way to create jobs is to keep a strong focus on growth. According to Raghuram Rajan, former Governor of the Reserve Bank of India, a 2 percent increase in growth is required to create the jobs that are needed. The GDP in the first two quarters of 2018 was recorded at 8.4 percent and 7.1 percent. The expectation from this year’s budget is to create policies which push the growth rate.
However, credit ratings agency, Moody’s has forecasted that India’s GDP rate will slow down to 7.3 percent in 2019 and 2020.
This budget will be looked at closely by job seekers to see if it can lay down a marker and prevent the unemployment situation from going out of hand.
The major talking points of the 2019 budget from a jobs standpoint would be:
- Balancing between optimizing workforce in central government departments and filling vacancies and creating jobs
- Objectively recording the unemployment rate in the country and giving that data’s access to the public
- Increasing the growth rate to create more jobs in the private sector - both manufacturing and services