The capex push was expected to keep the economy on the jump and reduce unemployment rate, which the opposition claims is hovering at a 45-year-high. Official data, however, suggests that in the past four years, India created 8 crore jobs through FY18 and FY22, or an average of 2 crore jobs every year, while the Periodic Labour Force Surveys further show that the labour force participation rate increased from 49.8% to 57.9% between FY18 and FY23. The RBI, which released fresh data this week, estimated that 4.67 crore new jobs were added in FY24 alone, while the growth rate doubled to 6% from 3.2% a year ago.
But private forecasts are flashing red. While CMIE data pegs FY24 unemployment rate at about 8% – higher than last year – a Citigroup report stressed that even with a 7% GDP growth rate, India may add just about 8-9 million jobs a year as against the needed 11-12 million. The government has strongly dismissed the data, but what’s undeniable is the slack in the informal sector.
According to the government’s Annual Survey of Unincorporated Sector Enterprises data, the informal sector employment rose from 97.9 million in FY22 to 109.6 million in FY23, but remains well below the pre-Covid levels of 111.3 million in FY16. MSMEs and the unorganised sector suffered massively post-2016 and the informal sector in general took a one-two punch due to demonetisation, GST rollout and Covid-19 pandemic and is yet to recover fully. The estimated number of establishments saw a remarkable rise during 2010-2015, with the 2015-16 round showing 63.4 million establishments. But that number fell to 59.7 million in FY22, due to Covid-19 and though it later increased to 65.4 million FY23, the number of workers remains below the pre-Covid levels.
Unincorporated enterprises are those that are not legally incorporated as a separate legal entity and typically include small businesses, sole proprietorships, partnerships and informal sector businesses. The sector is one of the key job generators and hence policy wonks want the government to keep a weather-eye on it, besides undertaking measures such as credit support for MSMEs.
Another area that needs urgent attention is the rural economy, where the twin-evils of unemployment and inflation seem to have caused untold voter resentment. It remains to be seen if the forthcoming budget will pivot towards generous welfare spending, or remains a real tightwad. But in their own unshowy way, the past few budgets did make some attempts towards welfare spending.
Thanks to the food grains distribution programme, allocations to the Ministry of Consumer Affairs, Food and Public Distribution have been the highest among others, while programmes for the welfare of women and children, MGNREGA and PM-Kisan received significant sums. In fact, the revised budget estimates for FY24 show a massive increase of Rs 1.24 lakh crore expenditure for various schemes covering employment, agriculture, defence and education.
