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Home / Business / Unemployment rate close to 8 per cent: Report

Unemployment rate close to 8 per cent: Report

While the economy has recovered from the pandemic, it has yet to reflect on the employment situation at the ground level
Representational image.
Representational image.
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Bhabhesh Hazarika , N. R. Bhanumurthy   |   Published 02.02.22, 02:14 AM

The unprecedented Covid 19 crisis has led to a significant proportion of people being pushed out of jobs. As the recent CMIE report suggested, the unemployment rate is close to 8 per cent.

While the economy has recovered from the pandemic, it has yet to reflect on the employment situation at the ground level.  In this background, Budget 2022-23 aims to create 60 lakh jobs over the next five years through PLI schemes in 14 sectors.

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The PLI scheme is expected to encourage more manufacturing units by both domestic and foreign private sector and open new job avenues. Efforts from the government have been seen in pushing jobs through promoting start-ups, unicorns, and MSMEs.

To support the MSME sector, the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) scheme is proposed to be revamped to enable the MSMEs to expand as well as provide job opportunities.

Additionally, the Emergency Credit Line Guarantee Scheme (ECLGS) is extended to provide additional credit to the MSMEs, especially in the hospitality and related sectors. This relief towards the MSMEs was much needed given that the sector got badly hit by the pandemic, with many micro and small units shutting down.

The budget also aims at promoting a digital eco-system for extending online training to find market-relevant jobs and entrepreneurial opportunities. As an expansion to the ongoing effort, the budget has opened opportunities to start-ups to create job opportunities across the sector such as agriculture, food processing, health, hygiene and water.

Several incentives, including concessional tax regime, financing windows through Nabard, reservation of defence procurement, and venture capital, have been outlined in the budget to promote a start-up eco-system and reaffirm its commitment to Atmanirbhar Bharat.

With a focus on infrastructure and social development in the North East region, the PM-DevINE scheme is expected to generate employment,  with women, filling the gaps in various sectors such as hospitality and tourism .

Similarly, the Budget also focuses on generating green job opportunities for youth, emphasising on sectors such as artificial intelligence, geospatial systems and drones, semiconductor and its eco-system, space economy, genomics and pharmaceuticals, green energy and clean mobility systems. 

Looking at some of the schematic/sectoral allocations, Budget 2022-23 has increased the allocation, although not substantially in some of the critical areas.

While construction bears significant forward and backward linkages with a significant multiplier effect on employment creation, the outlay under PMAY (both rural and urban) has seen a mere increase of 1.3 per cent over the 2021-22 revised estimates.

A target of 80 lakh new houses under the scheme with an allocation of Rs 48000 crore has been earmarked for 2022-23.

A few other schemes with immense potential for generating immediate employment opportunities coupled with increased productive capacity, such as PMGSY, AMRUT, Jal Jeevan Mission, and SBM, also received an increased allocation for 2022 23.

There has been a consistent increase in the demand for jobs as rural India is reeling under a lot of distress, and the Covid crisis is not over yet.

During the last two years, MGNREGS was effective in providing employment to those in rural areas who have less or no alternative employment opportunities.

A significant proportion of reverse migrants were also effectively absorbed by the scheme. Although it is a demand driven programme, MGNREGS witnessed a one-fourth decline in allocation for the year 2022-23. 

This could bring challenges to the implementing agencies in meeting the work demand as happened in the first half of 2021-22. 

There were calls for similar employment program in the urban areas, although the Budget ignores it completely.  One highlight of the Budget is its continued stress on the growth inducing capital expenditure, that drives jobs creation.

This is consistent with the National Infrastructure Pipeline projects.

Apart from the capex at the Union Government, the additional assistance of Rs 1 lakh crore to the states to support investment activities will have a domino effects on the employment opportunities in the long run.

Given that these infrastructure projects have a long gestation period, the visible impact on employment would depend on how quickly and to what extent these projects are realized.

Bhabhesh Hazarika & N.R. Bhanumurthy are with National Institute of Public Finance and Policy, New Delhi and Dr BR Ambedkar School of Economics University, Bangalore, respectively.



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