Budget 2021-22 needs a job-oriented ‘growth vaccine’ to ease suffering of the distressed
It is imperative for India to implement direct transfer of funds in the form of universal basic income for a short period to enable the distressed to spend funds and pep up demand
The first budget of the Narendra Modi government after the pandemic broke out is being presented on February 1 this year, in less than ten days. The Indian economy, battered by the pandemic and the lockdown, is looking for a recipe which brings relief to those who have been most affected and are still distressed during the present fiscal. They are primarily the jobless, young entrants to the employment market, small businessmen and unorganised workers including the rural poor.
The young people in the country are now the most suffering lot as far as the employment market is concerned. The slowdown in the last three years in the Indian economy has been followed by the corona pandemic and the lock down in various phases in the current fiscal year of 2020-21 which has affected mostly the young workers.
Higher job losses among those below the age of 40 years have resulted in an ageing workforce, which is not favourable for a strong recovery of the Indian economy, according to the Centre for Monitoring Indian Economy (CMIE). There are signs of recovery in the third quarter of the current fiscal and it may continue in the last quarter of 2020-21.This is a good sign but the disquieting fact is that this recovery is taking place with job cuts and no fresh employments. It is a job shrunk recovery and it affects mostly the young people and those who have just come out of colleges and universities to look for employment.
This is a precarious situation for the policy makers and as of now indications are that the Narendra Modi government in its eighth budget after it came to power in 2014 still clings to the old policy of growth without caring for its job generation potential. The private investors are still not in a mood to invest as the demand level has not picked up to their expectations. The government cannot depend on them for economic revival.
In 2021, the Centre has to take main responsibility for investment without caring for restricting fiscal deficit. The present situation calls for highly innovative programmes which will lead to substantial job generation in a planned manner. The entire emphasis has to ensure that while focusing on high technology, the labour intensive sectors get a big push to absorb the burgeoning young labour force.
Recent CMIE data shows that the share of those over 40 years of age, which was 56 per cent in 2019-20, increased to 60 per cent by December 2020.
"The share of the relatively young has correspondingly shrunk. This ageing of the workforce again, does not bode well for a stronger recovery in the second half of 2020-21 or in the future," it said.
Graduates and post-graduates had a 13 per cent share in total employment in 2019-20. Their share in the loss of jobs was 65 per cent. As per the CMIE, out of the 14.7 million jobs lost, 9.5 million were those of graduates and post-graduates. This is a disquieting development. Our demographic advantage is due to the presence of highly-skilled people among the graduates and post graduates but they are losing their jobs.
The CMIE data show that job losses were concentrated among the younger workers. All age groups below the age of 40 suffered a fall in employment till December 2020 this year while all age groups above 40 years of age have seen a small gain in employment.
Further, salaried employees who accounted for 21 per cent of total employment in 2019-20, accounted for 71 per cent of the total job losses.
Nearly 15 million less people were employed in December 2020, nine months after the lockdown hit people's livelihood compared to those that were employed before the lockdown in 2019-20.
Those who lost jobs were concentrated in urban regions, among women, among the relatively younger workers, the graduates and post graduates and the salaried employees.
This scenario has to change and as many leading economists like Dr. Pranab Bardhan have said, it is imperative for India to implement direct transfer of funds in the form of universal basic income for a short period to enable the distressed to spend funds and pep up demand. This programme has seen success in some Latin American countries and this has big potential in India in the present period in contributing to economic revival.
The fact is that both in slowdown and during lockdown, the poor have been affected the most, the earnings in general of common masses have gone down, but the earnings of many big companies have gone up and many rich have become richer. The slowdown and lockdown have only widened the inequality in Indian society. This has to be stopped.
The Modi government may plan for a new India after five or ten years but for now, let this budget be the vehicle for a job oriented growth which gives some hope to the young workforce. That is the minimum that the people are looking for from Finance Minister Nirmala Sitharaman’s third budget.
(Views expressed are author's own)