Budget 2018: Modi Sarkar has No Jobs Policy

The Budget for 2018-19 has been presented and not surprisingly, job creation has been given short shrift by the Modi government. In an incredibly juvenile ‘analysis’ finance minister Arun Jaitley, in his speech, listed precisely six measures his govt. has taken to increase employment in the country. These include waiving EPF contributions and giving some income tax deduction for new employees, giving stipends and partially bearing cost of training to apprentices, sanctioning contract work in apparel and footwear sectors, and increasing maternity leave. Then, Jaitley concludes that due to these measures, 70 lakh new jobs will be created this year.

This perfectly captures the deathly indifference of the present govt. towards employment. It also symbolizes the brazenness with which Modi, Jaitley, et al are sailing through a massive jobs crisis India is grappling with. Jaitley’s argument appears to be that people were not working because mandatory contributions to provident fund were too high, or income tax payable was too high, or contract work was not available! Who would believe this reasoning, that too coming from the finance minister himself?

The reality is that in 2017, total number of jobs added was just 20 lakh, as per CMIE estimates based on a sample survey. This addition works out to an increment of just 0.5% over the whole year. In a condition where about 250 lakh people are joining the working age group (15-49 years) every year and at least 44% of them (110 lakh) are actively looking for jobs, can the addition of 20 lakh jobs be considered any success?

So, how come Jaitley claimed that 70 lakh jobs were created this year? He is claiming this on the basis of a controversial study by two economists who arrived at the estimate using enrollment in EPF, ESIC and NPS (three social security programmes). The assumptions made by these economists have been severely criticized by several other economists. Use of arbitrary age groups, double counting, and other fatal lacunae have been pointed out. That the finance minister should take recourse to this rather questionable study to define a country’s jobs policy is a travesty that only the present govt. is capable of.

The govt. is so blinded by its own rhetoric – or perhaps, so clueless about what to do – that in his Budget speech, Jaitley went on to announce more concessions on EPF payments, extension of fixed term (read contract) work to all sectors and setting up of ‘model aspirational’ skill centres (whatever that means) in all districts. This comprises the sum total of govt. policy on employment.

There is no policy initiative to boost industrial growth, no measures to revive flagging industrial investment, no desire to increase public investment in industrial promotion, and nothing for the MSME sector apart from the grand declaration that Rs. 3794 crore has been allocated for credit support, capital and interest subsidy and innovations. This last claim too is disingenuous because the total allocation to the MSME ministry has increased from Rs. 6481.96 crore last year (revised estimate) to Rs.6552.61 crore this year – an increase of mere 1% that will be more than wiped out by inflation!

What about the agricultural sector? Since a vast majority of Indians are employed in this sector, a serious attempt to resolve its ongoing downturn could help ease the exploding jobs crisis. Although Jaitley was fulsome in his rhetoric about the importance of agriculture and rural areas, his biggest policy announcement – that farmers will get 1.5 times return on their production cost – is just a pronouncement. There is nothing in the fine print to assure that this will actually be implemented through higher support prices. In other words it’s a promise that is no different than the one given 4 years ago by PM Modi during the 2014 election campaign and which has remained unfulfilled till now.

Like everything else in this Budget, the jobs claims and proposals are empty rhetoric, devoid of any substance. It is not possible to fool all the people all the time, as the old adage goes. Modi, Jaitley & co. had better realise this fast, or there is comeuppance coming their way very soon.