In the run-up to the 2024 Lok Sabha elections, the opposition narrative was largely centered on the issue of unemployment. The opposition INDIA alliance gave an emotional twist to the country’s crisis of unemployment, especially amongst Bharatiya youth. The opposition leaders somehow managed to create the impression that it is the Modi government that is solely responsible for their inability to find jobs.
Reality is of course much more complex than that. In the Bharatiya context, there is the issue of population explosion and there is a huge mismatch between the skill set required by prospective employers and the skill pool of Bharat’s educated youth. Many in Bharat don’t find jobs simply because they are unemployable. Our colleges churn factories of graduates with fancy degrees year after year, but these youth have no tangible skill set so finding formal employment becomes a challenge for them in a fast- changing economic and technological landscape.
Anyhow, let’s leave this issue for discussion for some other day. In this piece, we want to focus on Budget 2024 released by Finance Minister Nirmala Sitharaman on the 23rd of July, 2024. The budget has an unmistakable focus on the issue of youth employment. Thus, it is somewhat successful at countering the opposition’s “youth unemployment” pitch against the Modi government. To what extent is this counter successful, only time will tell.
Finance Minister Nirmala Sitharaman announced three “Employment linked Incentive” schemes based on enrollment in the Employees’ Provident Fund Organization (EPFO).
The first scheme expected to benefit 2.1 crore youth over 2 years, will provide a one-month wage of up to Rs. 15,000 for all persons entering the workforce in the formal sector, that is first-time employees. The subsidy will be paid in three installments, and the eligibility limit will be a salary of up to Rs 1 lakh per month.
The second scheme is aimed at boosting job creation in manufacturing. The scheme will incentivize additional employment in the sector and is thus expected to benefit up to 30 lakh youth entering employment, and their employers. An incentive will be provided at a specified scale directly both to the employee and the employer with respect to their EPFO contribution in the first 4 years of employment.
The third scheme aims to boost employment by supporting employers who do additional hiring by reimbursing them. Any additional employment with a monthly salary of up to Rs 1 lakh will be considered under this scheme. The government will reimburse to employers up to Rs 3,000 per month for two years towards their EPFO contribution for each additional employee. The scheme is expected to incentivize additional employment of 50 lakh persons.
Besides these three employment-linked schemes, two new schemes have been announced for skilling the youth. One is a centrally sponsored scheme aimed at skilling 20-lakh youth over a five-year period. The scheme with a total outlay of Rs 60,000 crore, aims at fulfilling this objective by upgrading 1,000 Industrial Training Institutes (ITIs) in hub and spoke arrangements with outcome orientation. It’s an ambitious scheme that aims to make Bharatiya youth more employable by imparting industry-specific skills. The course content and design will be upgraded to reflect the skill needs of industry. New courses will also be introduced for emerging needs.
The most dynamic scheme introduced in the Budget for skilling youth is a comprehensive scheme for providing the youth of Bharat with internship opportunities in 500 top companies. The first-of-its kind scheme aims to cover 1 crore youth in 5 years. Although the participation of companies in this internship scheme hasn’t been made compulsory, it is voluntary.
Under the scheme, the youth will gain 12 of months solid exposure to a real-life business environment, getting to learn across varied verticals and expanding their skill set. The interns will be provided with an internship allowance of Rs 5,000 per month and a one-time assistance of Rs 6,000.
The participating companies will be expected to bear the training cost and 10 percent of internship costs from their CSR fund pool. Youth aged between 21 and 24, who are neither employed nor engaged in full-time education, will be eligible to apply for the scheme.
This innovative scheme could indeed be a game changer in terms of tackling the issue of youth unemployment. Most young people are not immediately employable after graduation. Moreover, it’s not easy to land an internship. This leads to a vicious cycle of frustration and disappointment. Students with professional degrees like MBA, engineering, etc. perhaps still find it relatively easier to land jobs or at least internships after graduation. However, the scenario is rather bleak for humanities graduates, the majority of whom are rendered unemployable with no ready-made market-appropriate skill set.
Thus, such a scheme providing young graduates across disciplines with internship opportunities at leading companies can indeed be a game changer, provided it’s implemented properly and effectively. Perhaps, in the future, the government could consider widening the scope of this scheme by making it mandatory for companies above a certain size (the government could come up with a set of specifications to decide this) to take in a fixed number of interns every year, and fund the training program through their CSR funds.
Most importantly, the internship opportunities provided under this new scheme could significantly boost the employability quotient of Bharatiya youth. With concrete experience under their belt, they will be more likely to land a job. However, the implementation is key to the success of this scheme. It needs to be monitored to ensure that the whole thing doesn’t become a formality with companies taking in interns merely to boost their image in front of the government without making any effort to impart tangible skill-based training to these young people.
On the flipside, the stipend of Rs 5,000 per month announced by the Finance Minister in the budget speech is way too low by today’s standards. This certainly doesn’t do much for a young person burdened with taking care of their family. However, it does create a roadmap for boosting youth employment in the long term by skilling the youth adequately.
Looking at all 5 schemes announced by the Finance Minister for boosting youth employment and skilling the youth, one can certainly say that none of these schemes seem populist. The government didn’t announce a monthly or one-time direct cash transfer for unemployed youth so it’s not a budget that’s doling out freebies. It rather tries to create conducive conditions for boosting youth employment. By incentivizing first-time employees, the budget rewards those who have joined the workforce instead of doling out freebies for the unemployed. Thus, politically speaking, it’s not the best budget for BJP. The unemployed youth of India wouldn’t quite get the finer points of the budget in terms of its focus on boosting employment opportunities. Instead, they would be simply resentful that the government has not provided them with any financial benefits, or direct opportunities for employment.
However, the Modi government also knows that doling out freebies is not the right approach to solving the unemployment crisis in the long term. Thus, the intent of the budget is at the right place even though the schemes aren’t as dynamic and innovative as they could be.
The budget also holds some promise for students. The Finance Minister announced that the Centre would provide financial support for loans up to Rs 10 lakh for higher education in domestic educational institutions. The support will be provided through e-vouchers, which will be given to one lakh students annually, with an interest subsidy of 3 percent of the loan amount. This scheme again could be a game changer in terms of boosting the enrollment of Indian youth in higher educational institutions.
The Finance Minister also announced that the government will set up working women hostels across the country to boost female participation in the workforce. Creches will also be set up to enable women with kids to participate in the workforce. It’s indeed a welcome step since the percentage of female workforce participation in Bharat remains abysmally low, compared to other countries.
The Finance Minister also announced new measures for promoting R&D (Research and Development) within the higher education sector. She announced that the government will operationalize the Anusandhan National Research Fund. It will seek to act as an apex body to strengthen and promote the R & D ecosystem. Furthermore, the Anusandhan National Research Fund will be set up for basic research and prototype development and a financing pool of Rs 1 lakh crore will spur private sector-driven research and innovation at a commercial scale, the Finance Minister emphasized.
