The budget 2021-22 is balanced in view of the difficult conditions facing the country. India’s fast-growing economy is not doing enough to create jobs. To address this, the government should focus not only on accelerating growth, but also fueling employment. So far, our V-shaped revival of gross domestic product has not translated into the restoration of lost jobs. According to figures from the Center for Monitoring the Indian Economy, India’s unemployment rate rose to 9 percent in December, with 9 million people losing their jobs between September and that month. The central budget did not mention them, but it was up to the government to recognize unemployment as a serious challenge and work for job creation in the sectors.
Although recovering quickly after an unprecedented year, declining employment in some sectors is a matter of concern and requires urgent attention. While the center focuses on healthcare, banking, agriculture and insurance, the services sector has been hit hard by the epidemic. The tourism, hospitality and entertainment industry, the major job creators, needs special attention. The infrastructure measures announced in the budget could boost tourism in the long run, with a 19% reduction in budget allocations and less resources allocated for tourism infrastructure development frustrating. Not only does India need more employment, it also needs quality jobs.
Similarly, there is a need to address the current shortcomings in the Indian rural employment program. Revised estimates for the Mahatma Gandhi National Rural Employment Guarantee Scheme, the livelihood of millions of unemployed migrant workers who had to return home during the lockdown, are not enough. Budget allocation of ₹73,000 crore for this scheme is 35% less than the revised estimate ₹1.11 trillion by 2020-21. In the current scenario, the government may look at increasing this allocation to reduce unemployment in rural areas. In addition, urban employment programs similar to the rural employment scheme can be very effective in tackling rising unemployment in large cities. Pushing for big infrastructure projects is good, but most jobs may not come in the near future. During their long gestation period, job corridors will depend on how quickly capital-intensive projects such as financial corridors set off.
Another area for India’s micro, small and medium enterprises (MSMEs) is relief, or a sector that employs almost 40% of the country’s informal workers and serves as the backbone of our economy. The lockdown has severely damaged the sector, with many units facing bankruptcy. While the central allocation to the MSME Ministry will double in 2021-22, the bulk of it will go to the Guaranteed Emergency Credit Line (GECL) facility, which provides liquidity and credit guarantees to MSMEs. Since most of this sector is unofficial and unregistered, it is unlikely that these loans and backstops will be taken as large.
Instead of relying solely on the private sector to provide employment, the government should work harder to improve the health of MSMEs. Initiating the digitization of small businesses can prove beneficial from the perspective that they can join the mainstream and accelerate job creation.
The e-commerce sector during our lockdown has done a good job of delivering essentials and non-essentials to homes. It’s not just online grocery delivery platforms, but a wide variety of e – retailers beyond their expertise to cater to the needs of citizens. The growth of e-commerce with the support of physical retail has created new opportunities for local level retailers. It has helped them to develop resilience and new abilities that will help them grow. Traditional retailers have seen impressive jumps in e-commerce sales either directly or through online marketplaces.
In that context, what the Center has not adequately explained is that India has a 2% equality levy on foreign e-commerce companies. According to the India Brand Equity Foundation (IBEF), the country’s e-commerce industry is projected to reach $ 99 billion by 2024, with an annual growth rate of 27%. As the number of consumers shopping online has increased since the epidemic, categories such as grocery and fashion / clothing have become significant drivers of this expected growth. But not everyone welcomes the trend. We still have groups like the Confederation of All India Traders (CIIT) against the inequalities caused by big e-commerce players. But opposition to online retailers ignores the benefits they offer to the Indian economy. Unfortunately, selfish interests often cause the sector to grow by opposing online retailing and supporting compulsory tax and regulatory measures.
Government Atmanirbhar Bharat and other post-Kovid relief packages may see themselves as ‘mini’ budgets, but they are in response to an epidemic-induced lockdown. The Government should now focus on the long-term growth and overall development of India. As our economy prepares to return to normal, assistance to the disabled sectors, which could provide employment for millions, will go a long way in ensuring a balanced recovery. These sectors are not the only vaccine required from our government.
Lalit Bhasin is the President of the Society of Indian Law Institutions