Union Budget 2022 | Employment generation a recurring theme; capex push may create jobs but few misses too

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Job creation seems to be the recurring theme of the Union Budget for 2022-23 as Finance Minister Nirmala Sitharaman enhanced capex allocation to Rs 7.5 trillion and gave a thrust to infrastructure projects, PM housing scheme, and production-linked incentive (PLI) schemes.

"Capital investment holds the key to speedy and sustained economic revival and consolidation through its multiplier effect. Capital investment also helps in creating employment opportunities, inducing enhanced demand for manufactured inputs from large industries and MSMEs, services from professionals, and help farmers through better agri-infrastructure," Sitharaman  said in her Budget speech.

She said the Productivity Linked Incentive (PLI) scheme in 14 sectors has "received excellent response, with a potential to create 60 lakh jobs".

Talking about the infra push in her Budget speech, FM Sitharaman said PM Gati Shakti is a transformative approach for economic growth and lead to "huge job and entrepreneurial opportunities for all". The capex boost will positively impact employment generation across sectors, she hinted.
The infra push will directly lead to employment generation, Transport Minister Nitin Gadkari told the media after the Budget was tabled in Parliament.

The Budget 2022, h0wever, did not hike MGNREGS allocations despite the Economic Survey raising expectations on this front, stayed silent on an urban employment gurantee programme, and did not announce to expand the wage subsidy scheme through EPFO.

The FM, however, remained gung-ho on infra push and the umbrella PM Gati Shakti initiative to create jobs along with other capital expenditures.

"The approach is driven by seven engines, namely, roads, railways, airports, ports, mass transport, waterways and logistics infrastructure. All seven engines will pull the economy forward in unison. These engines are supported by the complementary roles of energy transmission, IT Communication, bulk water and sewerage, and social infrastructure.

"Finally, the approach is powered by clean energy and Sabka Prayas – the efforts of the central government, the state governments, and the private sector together – leading to huge job and entrepreneurial opportunities for all, especially the youth," she said.

Job creation has been a prickly issue in India as demand has exceeded employment generation. The situation worsened after the COVID-19 outbreak and the subsequent economic slowdown. This had a massive impact on the larger labour market. Although there was a rush of jobs in sectors like IT and e-commerce, several traditional and labour-intensive sectors are still struggling.

THe FM also mentioned that the push for green economy will also create an enabling environment for employment generation. She further said that telecommunication in general, and 5G technology in particular, can enable growth and offer job opportunities.

"Required spectrum auctions will be conducted in 2022 to facilitate rollout of 5G mobile services within 2022- 23 by private telecom providers," she said.

The Budget allocated Rs 73,000 crore for the Mahatma Gandhi National Rural Employment Guarantee Scheme this year, same as the BE for 2021-22. But in RE of FY22, the allocation was enhanced to Rs 98,000 crore. Thus, the BE allocation for 2022-23 is way short of the  RE of FY22. In 2020-21, the actual expenditure on MGNREGS was Rs 1,11,170 crore .

Some experts seem to have got disheartened as a lower allocation comes a day after the Economic Survey 2021-22 underlined that the demand for work under MGNREGS is still higher than the pre-pandemic level.

Demand for rural jobs is likely to stay high due to several factors, including the reverse migration that took place following the pandemic outbreak.

But to be sure, since MGNREGS is a demand-driven scheme, the government may hike allocation during the year.
The Budget 2022, however, refrained from announcing an urban job guarantee scheme. This was despite growing demand from experts, labour economists, trade unions and a parliamentary panel in recent times for a policy catering to the floating workforce and reducing the urban unemployment rate.

Urban unemployment has been ticking higher than the national average and recent data from the Centre for Monitoring Indian Economy showed that urban joblessness continues to be sticky. Urban joblessness was 8.16 percent in January 2022 compared with the national average of 6.57 percent.

In a large labour market like India, this translates into a higher number of unemployed people, thus impacting consumption revival, poverty alleviation and productive engagement of citizens in work.