By Nantoo Banerjee
The best thing the Narendra Modi government’s last full budget before the next Lok Sabha election can do is to focus primarily on job creation and provide attractive incentives to large industrial investments to help push quality employment. The government has done reasonably well in the infrastructure investment sector, despite various constraints in dealing with state-level authorities. However, it has not succeeded enough in attracting fresh investments in manufacturing to create lasting jobs. The manufacturing field needs a massive investment drive like of which the country has not witnessed since the 1960s and ’70s. The measure will automatically create a large number of quality jobs. Large foreign investments in manufacturing provide the best option. This will also give credence to the ruling Bharatiya Janata Party’s any future election promise with regards to employment generation.
Interestingly, BJP’s election manifesto for 2019 Lok Sabha polls did not specifically mention the party’s job generation target as it did before the 2014 LS election. Instead, the 2019 manifesto specified support to 22 ‘Champion Sectors’ as ‘drivers of the Indian economy’ providing opportunities for the youth. “We will optimally leverage the untapped employment-generation potential of sectors such as defence and pharmaceuticals,” the document said. The party’s 2014 election manifesto aimed at creating 250 million jobs over the next 10 years as part of an economic development programme that could create 100 new ‘smart’ cities. BJP had put jobs and urbanisation at the centre of its 2014 policy pitch. Unfortunately, it failed miserably to achieve the job generation target. This could explain why the party avoided fixing an employment creation target in the 2019 LS election manifesto.
BJP’s last LS election manifesto chose to focus on the economy. It said that India was branded as ‘fragile five’ in 2014 and “within five years, we have turned India into a bright spot that is not only the fastest growing major economy of the world but also enjoys macroeconomic stability. We aspire to make India the third largest economy of the world by 2030. This implies that we commit to make India a US$5-trillion economy by 2025 and US$10-trillion economy by 2032.“ They appear to be achievable targets despite the covid pandemic which witnessed a negative economic growth in 2020. Unfortunately, the GDP growth under the current regime has not quite reflected on the employment growth in the country. India’s nominal GDP at the end of last year is estimated at $3.8 trillion under the World Economy Ranking 2022. The first advance estimates of national income for 2022-23 is significant because the data is used for preparing the 2023 Union Budget. It is said that the country’s GDP is likely to grow seven percent in FY23.
Meanwhile, the unemployment situation in India continues to be quite alarming. There is no reliable annual unemployment and job generation figures in the country. Government jobs are limited. A report published on July 27, 2022, by the Department of Personnel and Training under the union government said that nearly 22.06 crore applied for central government jobs since 2014, of which only 7.22 lakh were employed in the last eight years. The year-wise number of jobs given stood at 1,30,423 in 2014-15; 1,11,807 in 2015-16; 1,01,333 in 2016-17; 76,147 in 2017-18; 38,100 in 2018-19; 1,47,096 in 2019-20; 78,555 in 2020-21; and 38,850 jobs in 2021-22. Interestingly, the maximum central government jobs came in the election years of 2014-15 and 2019-20. Last week, the union government released nearly 71,000 appointment letters to unemployed youth across the country at Prime Minister Narendra Modi’s ‘Rojgar Mela’ (job fair) ahead of assembly elections in nine states this year.
The trouble with the government’s infrastructure projects is that most of the jobs created during the construction time are contractual in nature. Large number of people engaged in such projects become jobless after their completion. Project hurdles also impacted employment. Going by an internal report of the NITI Aayog, the government may axe as many as 116 infrastructure projects worth Rs.1.26 trillion, due to unresolved obstacles ranging from land acquisition to Centre-State tussles. A good number of them concern road and rail construction. So far, these projects have incurred a cumulative capital expenditure of only Rs 20,311 crore. Frustrated with their lack of progress, the Centre is considering finally putting a lid on them.
Despite the government’s best initiative, several large and important infrastructure projects are running behind schedule. Among them are: $30-billion Narmada Valley Development project; $2-billion Navi Mumbai International Airport; nearly $100-million Chenab River Railway Bridge, the world’s highest rail bridge, establishing a Udhampur-Srinagar-Baramulla rail link; $90-billion Delhi-Mumbai Industrial Corridor (launched in 2007); $130-billion Bharatmala Project connecting the country’s economic corridors, ports, airports and industrial hubs; $2.2-billion Mumbai Trans Harbour Link; Inland Waterways Development Project covering 14,500 km navigable waterways; and nearly $1-billion Zoji-la & Z-Morh tunnel project bringing Kashmir and Ladakh closer.
Instead of announcing new construction projects, the next year’s budget should provide impetus for completion of those large unfinished projects and focus on programmes that would create lasting jobs for the unemployed. In the absence of deep pocket domestic investors, the budget should provide strong financial assistance and tax incentives to foreign investors in manufacturing. More than FDI inflows, the government should be more concerned about the FDI destination with manufacturing given preference to services. The FDI inflow is still tilted in favour of the services sector as pointed out by India Ratings and Research (Ind-Ra). Within the services sector, FDIs predominantly flowed into trading, telecommunications, banking/insurance, IT/business outsourcing and hotels/tourism. FDIs in manufacturing are mostly concentrated in segments such as auto, chemicals, drugs and pharmaceuticals, metallurgical and food processing.
The budget should also be concerned about creating new jobs across states by providing special incentives to foreign industrial investors in projects in a large number of states which they have been normally skipping for various reasons. The budget should find ways — maybe, in quick consultations with state governments — to induce FDIs beyond a few chosen states. Currently, FDIs are highly clustered around only a handful of India’s 28 states and eight union territories. Of the total FDI inflow of $146.7 billion between October 2019 and March 2022, only four states attracted as much as 83.0 percent of the fund with Maharashtra accounting for 27.5 percent, Karnataka 23.9 percent, Gujarat 19.1 percent and Delhi 12.4 percent. The government will fail in the country’s economic development as a whole and nation-wide employment generation effort by ignoring the investment needs in other states. Employment focus will make the BJP government’s term-end budget really meaningful and attractive to the public before the party prepares a new economic and social agenda for the next Lok Sabha election in 2024. (IPA Service)