'Budget is Nondescript, Not What India Needs; Steps to Generate Jobs Barely Scratch the Surface'
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Published 2024-07-26
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In what the government could view as a searing critique of the budget, one of India’s most renowned economic commentators has called the budget “nondescript” adding “it’s not what the country needed”. Speaking specifically and at length about measures announced by the budget to increase employment, Prof. Pronab Sen said they will “only scratch the surface – barely”.
In a 50-minute interview to Karan Thapar for The Wire, Prof. Sen, presently Country Director of the International Growth Centre and Chairman of the Standing Committee on Statistics and a former Chief Statistician, said neither the government’s contribution of Rs. 3,000/- a month per person for two years to the employers EPFO payments nor the internship scheme are likely to lead to additional people being taken on either as full time employees or as interns. Prof. Sen speaks about this at length in the interview and I will leave you to hear the interview to understand his reasoning and, therefore, his conclusion.
However, Prof. Sen pointed out that there are steps the Finance Minister could have taken which could have, possibly substantially, increased formal employment but, he added, they probably did not even occur to her. Again, I will leave you to watch the interview to find out what these steps are.
Prof. Sen also pointed out that – although this was not part of the employment section of the budget speech – measures that have been taken to revive MSMEs will have an impact on employment, although it will be casual employment and not formal employment. However, how significant and sizeable this impact will be depends upon the attitude of banks, through whom the mudra loans and credit guarantees offered to MSMEs will be sanctioned. The attitude of bank is, therefore, critical.
Again, Prof. Sen added that the Finance Minister probably did not realize that what she has done for MSMEs will increase casual employment (not formal employment). This is a fortuitous happy outcome, he added.
Again I will leave you to see the interview to understand this point. Prof. Sen speaks about it in some detail.
In the interview Prof. Sen also talks about the challenge of private sector investment and why it has failed to pick up. He points out that the government probably has not realized or, at least, not responded to the fact that low demand and consumption are one of the key reasons why investment is flat. Again, this is a sizeable part of the interview and I will leave you to see the interview to fully understand what Prof. Sen has said.
To help, I enclose below the full list of questions put to Prof. Sen. With a few exceptions they are asked in the order in which they appear below.
1) In each case let me start with the big challenge facing the economy before I come to how the budget has addressed it. First, unemployment. According to CMIE the overall unemployment rate in June was 9.16%. For 15-19 year olds it was 58.16% and for 20-24 year olds it was 46%. Secondly, even out of those who are deemed to be employed up to a 100 million are actually unpaid. So you can question what sort of employment that is. Now my question is simple: do we have a crisis of employment? And how serious is it?
2) Second, on the 13th the Prime Minister, citing an RBI report, said India had created 8 crore jobs in the past 3 to 4 years. The Economic Survey says we need to create 78.5 lakh jobs a year until 2030. The Survey calls it a challenge. Is the RBI report correct? Because if we have created 2 crore jobs a year then creating 78.5 lakh jobs a year shouldn’t be a problem.
3) Let’s against this background come to what the budget has announced about jobs. There was a whole slew of measures announced by the Finance Minister. Before I come to details what was your overall impression? Will they taken together make a significant difference?
4) Let’s come to details. The government will pay one month’s wage to all young people entering the workforce provided they are registered with the EPFO and 3,000 reimbursement to the employer for 2 years. Mrs. Sitharaman says this will benefit 210 lakh youth. But is this sufficient for employers to take additional people on? What about the rest of the salary? That’s uncovered.
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All Comments (21)
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This interview very factually raises questions on our finance minister's abilities. So many key budget measures that are so questionable.
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These incompetent politicians and bureaucrats waste all money of taxpayers. Incompetence eveywhere.
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10 years ago, the comments section was calling Karan all kinds of names and today they are singing praises of him. Audience has a fickle mind.
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Karan Thapar is best in what he does, never seen such a brilliant interviewer
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I always eagerly wait for Prof. Pronab Sen's analysis. Thank you Wire. 🙏🏻
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Interesting Fact: Census has not been done till now! And all parameters have not been analysed yet
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Excellent. Pranob allways clear headed and incisive and original.
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Thought of unsubscribing to the wire yesterday because it has been so long since Karan appeared in an interview. Thought Karan left. Great to see you sir!
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A very good episode. And if they are really interested, all it would take is minor tinkering. That's heartening. As far as data an d analysis goes, it boils down to what someone said in a debate. "iss sarkar ne sansthaon ke padon par aise logon ko rakha hai, jo uske jhadu maarne ke laayak nahin '. They were right! 😂 Proved by NTA, UPSC recently, and if you look closely, MOST? 😂 Let's see if rhe government find the humility and flexibility
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I joined the wire for monthly contribution due to Karan Sir
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Public Budget means " Poor become poorer & rich becomes richer in the democracies nation . AND private budget means income first than expenditure!! Is it true or false?????
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MSME growth appears to be the crucial factor that can boost employment and economic growth.
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जय-जय सविंधान जय-जय भारत
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Thank you so much to both the interviewer and the interviewee for this amazing bag of wisdom
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The skill development program is not working because Most of the Startups in India are Teaching institutes and all they do is earn Money By doing placement through Networking. This is the reason why AI startups (Placements apps) are also failing. These Education institutes have highly captivated the Networking and Placement Business thus foreign companies like FAANGS are in loss in India because these Educational institutes ask huge sums of Money for Educating and Placements. The Government is nothing but a Pyramid scheme for Votes gathering, their Modus Operandi is to find a Leverage and keep it as security proof and pay back the victims with high return money, making the victim a Puppet.
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Purchasing power has also gone down and the effects of inflation is like even someone who is earning more than 50k/60kpm or 6M or more yearly consider himself in Lower middle class which should be Least higher middle class if not high ideally... Savings are down, taxes are up.. everything just seems costly 😵💫
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Chandrakant Sampath, once fondly known as Warren Buffet of India, had famously said: “We are not resource poor; we are imagination poor.” When you drive out the Nobel Laureates, you remain with the rest.
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Exceptional discussion with no other substitute. Love from Kashmir ❤❤❤
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Expected a very comprehensive budget this time & not a “politically motivated” budget.
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Nobody gives an internship, this has been there since 2015, all the companies do is show the filled seats with their affiliate colleges and Digest the Money.
