While creating quality jobs with decent wages is clearly one of the biggest challenges before this government, does this Budget go far enough to tackle the issue? Well, if we look at this Budget in isolation, it may not have offered significant takeaways for employment generation. But, given the announcements that were made in the interim Budget of July 2024 to incentivise formalisation of the workforce, many of which are yet to be implemented, this Budget can be seen as laying the groundwork for generating employment opportunities, particularly for young people struggling to find stable jobs.

This Budget has marked a significant step in supporting MSMEs to scale up, upgrade their technologies, and gain better access to capital by raising their investment and turnover limits by 2.5 and 2 times, respectively. For example, the upper limit on investment for a micro enterprise, currently set at ₹1 crore, will be increased to ₹2.5 crore, and the turnover limit will rise from ₹5 crore to ₹10 crore. The same adjustments will apply to small and medium enterprises. This change will encourage many of the 5.7 crore MSMEs that have been hesitant to expand for fear of losing their MSME status, which comes with a number of benefits.

More importantly, the higher thresholds will allow businesses to invest in growth, hire additional workers, and create stable employment opportunities. Coupled with two schemes introduced in the interim Budget to incentivise employers in manufacturing and all other sectors to create EPFO-linked first-time employment – this move is likely to help generate more jobs in the formal sector.

Enough or not?

The Budget has also emphasised creating employment and entrepreneurship opportunities in labour-intensive sectors, particularly in leather and footwear, toys, food processing, and clean-tech. This focus is important, considering sectors like footwear, textiles, and food processing, despite being labour-intensive, have seen slower employment growth over the past decade compared to industries like chemicals and machinery manufacturing.

The Budget’s commitment to promote the tourism sector, including the development of 50 tourist destinations, skill development in hospitality and tourism, and offering MUDRA loans for homestays, is a positive step. Currently, accounting for 8 per cent of the nation’s employment, the tourism and hospitality sector is expected to create six million new jobs by 2034. As tourism in India expands, there is a need for a skilled workforce, particularly in tourist hubs, to provide high-quality services.

The Budget’s announcement to issue identity cards to 10 million gig workers and register them on the e-Shram portal was long overdue. This move will extend social security benefits to the growing tribe of freelance and part-time workers.

While the Budget addresses some aspects of employment, India’s employment challenges are vast and require continuous interventions. The share of India’s workforce in agriculture has increased from 44.1 per cent in 2017-18 to 46.1 per cent in 2023-24. Initially attributed to COVID-19-induced job losses, this trend continues and has raised concerns. Meanwhile, the proportion of workers in manufacturing has decreased from 12.15 per cent to 11.4 per cent, and in services from 31.1 per cent to 29.7 per cent. This begs the question: Are there insufficient job opportunities in nearby towns and cities for the rural population to go take up the work, or is it the low-quality, low-wage jobs that are pushing people toward low-productivity agriculture?

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