Decision Makers Weigh In On Modi 3.0 Budget's Bold Move To End The 'No Experience, No Job' Trap

The budget proposals for employment and skilling have boosted sentiment, with a focus on helping first-time job seekers overcome the 'no experience, no job' dilemma, the mandarins in North Block have asserted.

The employment-linked incentive scheme announced in this budget aims to make it easier for firms to hire those without previous experience, Finance Secretary T V Somanathan told The Hindu.

“There is an entry barrier for somebody who doesn’t have experience and we are trying to help penetrate that barrier through a fiscal incentive, so that the period for which a new entrant is perhaps on a learning curve and less productive, we subsidise that and make it more attractive for companies to hire such first timers,” he said.

Somanathan also highlighted that the fiscal incentive is expected to increase the employment growth rate relative to gross domestic product (GDP) growth.

Elaborating on the scheme's impact on industry, he noted that companies can choose between more or less automation, with fiscal incentives playing a significant role in their decision-making process.

However, he added a note of caution: the budget proposal does not imply that high-tech industry will suddenly become labour-intensive due to fiscal incentives, nor will a labour-intensive sector necessarily mechanise more in their absence.

Echoing the sentiment that job creation is a priority, Finance Minister Nirmala Sitharaman stated that the government’s employment-linked incentive schemes and the internship programme announced in Budget 2024 are merely a nudge for the private sector.

“It’s not compulsory for anybody; we are nudging people to do it. Who is intruding into the private sector?” Sitharaman told the Times of India.

It is worth noting that the Economic Survey 2023-24 highlighted the need for the Indian economy to generate approximately 7.85 million jobs annually in the non-farm sector by 2036 to meet the demands of a growing population.

Subsequently, Chief Economic Adviser (CEA) V Anantha Nageswaran emphasised the necessity for corporates to increase hiring and improve worker compensation, stating that such measures are crucial for sustaining demand and fostering economic growth.

“So now it is time for them to come good, not for the sake of the economy, not for the sake of the government, but for their own sake. Because without employment generation and income growth, there will not be demand visibility, which is what they need as well,” Nageswaran said in an interview with CNBC-TV18.

With the budget's emphasis on job creation, it is essential for corporations to heed the CEA's advice and invest in human capital, ensuring long-term growth and stability.