Union Budget 2025-26 Is Frustrating For India’s Workforce

By Dr. Gyan Pathak

At a time when India’s labour market is undergoing an unprecedented crisis, with about 19 per cent of them are in unpaid employment but counted as employed by the government, non-availability of jobs in the job market has been pushing the people towards self-employment which has risen to 58.4 per cent in 2024-25 according to Economic Survey 2024-25, and 46.1 per cent of India’s workforce were engaged in very low paying agriculture works in 2024 as per PLFS, the Union Budget 2025-26 is utterly frustrating for India’s workforce.

On the one hand Majority of India’s workforce are currently in disguised unemployment, counted as employed in government data – particularly in agriculture, self-employment, and household help works, and on the other the CMIE data which is only realtime data available for India shows unemployment rate on 30-day moving average basis at 7.7 per cent as on February 3, 2025. The government’s Economic Survey 2024-25 put unemployment rate at only 3.2 per cent for 2023-24 (upto July 2024) on usual status basis.

The third level of crisis with which the job market of India has been undergoing is the large-scale mismatch with the employability, chiefly due to Union Ministry of Skill Development’s wrong policies of skilling in the country ever since its establishment in 2015. Global Talent Shortage Survey 2025 has said that 80 per cent of employers in India are struggling to find out the right talent for works available. Nevertheless, Union Ministry of Labour and Employment has said that the percentage of skilled workforce in India in 2024 has risen to 51.3 per cent of the total workforce, claiming that they have become employable now. The crisis in the labour market is obvious, since the government is just distributing skill certificates, while they actually remain unemployable.

To conceal the crisis Union Government has just been playing the number game on every possible data – regarding skill, employment, and unemployment. Union Budget 2025-26 is not an exception, which is totally disheartening, and is just an act of an ostrich burying its head in the sand. What one can’t stomach is the boasting of the Union Government.

Let us take example even of Union Minister of Labour and Employment Dr. Mansukh Mandaviya, who has claimed that the Union Budget 2025 marks a landmark initiative in India’s labour welfare landscape, continuing the Government’s focus on labour welfare and employment generation, allocating a record ₹32,646 crore for the Ministry of Labour & Employment in FY 25-26—the highest ever and almost 80% higher than last year’s revised estimates.

Dr. Mandaviya did not stop here but goes far in highlighting the significance of this “historic allocation” stating:“I thank Hon’ble Prime Minister Shri Narendra Modi Ji for this historic budget which is the highest ever and almost 80% higher than last year’s revised estimates. Our focus is firmly on the newly announced Employment Generation Scheme (ELI), for which the budgetary allocation has been doubled from ₹10,000 crore to ₹20,000 crore. The allocation under the Employees’ Pension Scheme has been increased by ₹300 crores and under the PM Shram Yogi Maandhan Yojana by 37% compared to last year.”

Dr Mandaviya has concealed many hard facts in his statement since his focus was playing the number game, not the reality on the ground. For example, the Union Budget has allocated Rs 10,000 crore in ELI scheme, and India lost almost the entire year and the ELI schemes are yet to be launched. It remains non-starter. If this is the level of performance what is the use of doubling allocation to Rs20,000 crore?

One can see such number game in the entire budget for the Union Ministry of Labour and Employment, which made Dr Mandaviya to claim 80 per cent hike in allocation. The budget document shows that the allocation was increased from about Rs 18,307 crore in 2024-25 (RE) to Rs 32,646 for 2025-26.

PM Modi led Union Government has been in the habit of playing the number game, which can’t be taken on face value, and just can be levelled “playing to the gallery”. Let us take example of the budget allocation for the year 2024-25 which was announced at Rs 22,531 crore, but spent about 19 per cent less. The actual amount spent in 2023-24 was only Rs 11,385 crore. Therefore, there is no guarantee that government will actually spend the amount it has allocated in various schemes.

There are other issues too, such as implementation of new employment generation scheme. In the current financial year we have just seen how the ELI scheme worth Rs10,000 crore is still a non-starter, the RE for 2024-25 shows likely expenditure of Rs6799.43 crore, and hence we can only hope that the government will actually spend that much amount by March 31, 2025, by the end of the current financial year. Even in that event it will very low level of performance indicating of lack of capacity and ability of the government to create decent job as it was promised. It is in new employment generation scheme the allotment of Rs20,000 crore has chiefly increased the total amount of the budget, spending of which is highly doubtful.

This scheme is yet to start and it heavily depend on EPFO and the private sector companies. There are three schemes and government will give subsidy to companies for every new member of EPFO employed. Private companies have been hesitant on joining this scheme so far, one of the chief reasons of its being non-starter. EPFO is also not ready with the technology to implement this programme.

The Budget has been lauded on government support to MSMEs through various programmes, but as we have seen the deceleration in the manufacturing sector in India, in December 2024, which touched the slowest growth in one year, with PMI at 56.4 due to softer increases in factory orders and production, there is not much hope of its reversal, especially at a time when India’s GDP growth is likely to decelerate to 6.4 per cent in the current year from 8.2 per cent in 2023-24, to a four year low. Economic Survey 2024-25 expects further deceleration in 2025-25 in the range 6.3 to 6.8 per cent, it is very unlikely that MSMEs will have turnaround with the little budgetary support to them. Therefore, ELI scheme for new decent job generation is only a dream as of now, and there would not be large scale job generations.

Next item is capex which has been set at Rs11.21 lakh crore for 2025-26, reflecting 10 per cent increase from revised estimate for 2024-25 at Rs10.18 lakh crore. Since capex has also not succeeded in generating enough number of new jobs in the current year, one can’t expect the meagre increase, which will be even much low when price rise and inflation adjusted, will add any significant addition in job creation.

Rise in MGNREGA demand for jobs show that jobs in the rural and agriculture sector are not available in enough numbers. Union government has been cutting allocation for this scheme from several years, and allocation for 2025-26 stands same at Rs86,000 crore as last year. Which means in realtime, value of the allocation is much low when adjusted to price rise and inflation. Union Budget 2025-26, can’t generate much employment in rural and agriculture sector, with little increase in budgetary support in some of the schemes.

Allocation in skill development has been increased, but our past experience shows that we have been just distributing certificates of skill while they remain unemployable ins changing world of work. Total allocation has been increased in Labour, Employment and Skill Development from Rs15,869 crore in 2024-25 (RE) to Rs28,717 crore for 2025-26, but success of this will depend only on quality skilling.

Then comes the social security budget for labour force. There is not much increase in this head too. The actual spending in 2023-24 was Rs 10,599 crore, which has declined in the current year 2024-25 to Rs 10,568 crore, and the Union Budget has increased its allocation to only Rs 11,593 crore. This level of social security allotment is an indirect admission that there will not be large scale increase in the new quality job generation which require social security coverage.

In brief, the crisis in the labour market may actually deteriorate and the promised quality new job generation can’t be realised on the meagre provisions of the Union Budget 2025-26. (IPA Service)