Union Budget 2018-19
Creating Opportunities for Youth and Employment

Gautam Jha

On February 1, 2018, the finance minister, Sh. Arun Jaitley presented the Union Budget for the financial year 2018-19. The union budget, also known as annual financial statement, is a statement of estimated receipts and expenditures of the government during a particular year (in this case April 1, 2018 - March 31, 2019). While outlining the estimated sources of revenue, the union budget also illustrates the allocation of expenditure/ resources among different programmes (old and new) for the coming financial year.

The growth and development trajectory that will be followed by the Indian economy is outlined in detail in the union budget. The union budget touches on several socio-economic aspects of the Indian economy. This analysis focuses on two key but interlinked issues of the Indian economy - Employment and Takeaways for Youth. Almost one million people are added to country's workforce every month. While the overall unemployment rate in India is around 3.5 per cent, the worrying factor is the fact that unemployment rate among the age group of 15-24 years (youth - who are supposed to be first time workers) has increased from around 10 per cent in 2014 to 10.5 per cent in 2017 as per a recent International Labour Organization Report. Thus, providing gainful employment opportunities to the first time workers is an emerging challenge for the government. This concern has also been reflected in the Economic Survey 2017-18. With lack of timely data, the employment challenge cannot be assessed unhampered. In this regard, the Economic Survey 2017-18 has come out with a new way to estimate formal sector non-farm payroll with the help of increased digitization and using the data provided by GSTN.

Let us now turn our attention to the specifics that are included in this year's union budget. The budget exhorts the youth of our nation to lead a life free of corruption, a problem that has plagued our economy for a long period of time. Removal of certificate attestation and interview requirements for appointments in Group C and Group D posts is claimed to have saved a lot of time and money for lakhs of our youth. The budget outlines a number of steps which will have a positive impact on generating gainful and productive on-farm and non-farm employment for the small and marginal farmers. Initiatives like increasing the Minimum Support Price (MSP) to 1.5 times the cost of production of kharif and rabi crops, upgrading the existing 22000 rural haats into Gramin Agricultural Markets (GrAMs) in line with e-NAMs and APMCs, improving connectivity of habitation to GrAMs, cluster cultivation of horticulture crops in a scientific manner, etc., will have a positive impact on employment generation in rural areas. In these GrAMs, physical infrastructure will be strengthened using MGNREGA and other government schemes. The allocation for the former has been increased from Rs. 48000 crore to Rs. 55000 crore.

Women Self Help Groups (SHGs) will be encouraged to take up organic farming under the National Rural Livelihood Programme. The budget outlines a number of programmes which aim to provide maximum livelihood opportunities in the rural areas related to rural infrastructure, credit accessibility, rural housing and connectivity among others. The total allocation to be spent by the ministries will be Rs. 14.34 lakh crore, including extra-budgetary and non-budgetary resources of Rs. 11.98 lakh crore. Apart from employment due to farming activities and self employment, this expenditure is estimated to create employment of 321 crore person days, 3.17 lakh kilometers of rural roads, 51 lakh new rural houses, 1.88 crore toilets, and provide 1.75 crore new household electric connections besides boosting agricultural growth.

Development of skill and access to quality education and proper training is an important cog in the development of young potentials into trained human capital. In this regard, the budget has proposed a number of steps. The budget talks about moving from 'blackboards' to 'digital boards' by increasing digital intensity. Establishing Ekalavya Model Residential Schools on par with Navodaya Vidyalayas in areas where tribal population is high will provide necessary best quality education to tribal children. Provision of funds for research and related infrastructure in education, establishment of new railway university and institutes for architecture, etc, is expected to have a positive impact on skill development among youth so as to make them employable. To invest in research, training and skilling in robotics, artificial intelligence, digital manufacturing, big data analysis, quantum communication and internet of things, the budget directs the Department of Science & Technology to launch a Mission on Cyber Physical Systems to support establishment of centres of excellence. The allocation on Digital India programme has been doubled to Rs. 3073 crore in 2018-19.

The budget recognizes the role of Micro, Small and Medium Enterprises (MSMEs) as a major engine for growth and employment in our economy. In this regards the budget outlines certain measures to reduce the tax burden on MSMEs so as to create larger number of jobs. The benefit of reduction in corporate tax rate to 25% has also been extended to companies who have reported turnover up to Rs. 250 crore in the financial year 2016-17. This is expected to benefit the entire class of MSMEs, which accounts for almost 99% of companies filing their tax returns. The lower corporate income tax rate for 99% of the companies is expected to leave them with higher investible surplus which in turn will create more jobs. Lending targets under MUDRA Yojana has been set at Rs. 3 lakh crore for the year 2018-19, which will largely be distributed through Non Banking Financial Companies (NBFCs). A large number of steps were taken during the last 3 years to boost employment generation. As per the budget document and an independent study, these steps have helped in creating about 70 lakh jobs in 2017-18. In order to keep this momentum, the budget has announced that the Government will contribute 12% of the wages of the new employees in the Employee Provident Fund for all the sectors for next three years.  The facility of fixed term employment, which was introduced for the apparel and footwear sector, has been proposed to be extended to all sectors.

The budget has also made an attempt to increase employment of women in formal sector and enable them to increase their take-home wages. For this the budget has proposed to make amendments in the Employees Provident Fund and Miscellaneous Provisions Act, 1952 to reduce women employees' contribution to 8% for first three years of their employment against existing rate of 12% or 10% with no change in employers' contribution. The Government is going to set up a model aspirational skill centre in every district of the country under Pradhan Mantri Kaushal Kendra Programme. To boost the apparel and made-up sector the government has proposed to increase the outlay for the textile sector from Rs. 6000 crore in 2016 to Rs.7148 crore in 2018-19. In order to create employment and aid growth, Government's estimated budgetary and extra budgetary expenditure on infrastructure for 2018-19 is being increased to Rs. 5.97 lakh crore against estimated expenditure of Rs. 4.94 lakh crore in 2017-18.

Certain tax incentives have also been proposed to boost employment growth in certain sectors. At present, "a deduction of 30% is allowed in addition to normal deduction of 100 % in respect of emoluments paid to eligible new employees who have been employed for a minimum period of 240 days during the year under section 80-JJAA of the Income-tax Act. However, the minimum period of employment is relaxed to 150 days in the case of apparel industry" (Page 26 Par148 Union Budget 2018-19). In order to encourage creation of new employment, the budget proposes to extend this relaxation to footwear and leather industry. Further, it has been proposed to rationalise this deduction of 30% by allowing the benefit for a new employee who is employed for less than the minimum period during the first year but continues to remain employed for the minimum period in subsequent year.

The details mentioned above are expected to create a positive environment for skill development among youth as well as employment generation in both, farm and non-farm activities including greater possibility of formalization of workforce with increased digitization. The budget also outlines a number of schemes and programmes that are focused on increasing infrastructure, development of rural economy, strengthening healthcare - particularly in rural areas, among others. This is expected to have a positive impact on the development trajectory of our economy.

The Author is Assistant Professor, PGDAV College (Eve.) University of Delhi