The Union Budget 2023 holds great importance for India as a vital tool for shaping the country's future. As per CEBR, India has the potential to become 10 trillion USD by 2035, and the benefits of this economic growth must be distributed among the population. The Budget is also essential for addressing the current financial problems, including unemployment, inflation, and the fiscal deficit.
The emphasis on formal employment creation for the upcoming 10 years should be the Budget's most significant component. Therefore, we encourage the Government to consider the following crucial factors focusing on improving employment and employability in the country.
Prioritising Skilling: In the Union Budget 2023, there needs to be a renewed emphasis on skilling. The massive shifts in the world economies over the past ten years, sparked by technology and accelerated with the onset of the pandemic, have significantly impacted India's job market. Skill development will help people find, develop, and nurture their innate talent in any desired field. To further boost the Government's skill development endeavours, the Budget can enhance the Direct Benefits Transfer Scheme (DBT). The ability for learners to directly redeem skill stamps with skill partners would be a huge benefit. Each participant should be able to redeem their DBT-based benefits directly with the skill partner after successfully completing the said programme and be supported by a legitimate job covered by social security. It would be ideal to see this offered as a service because it will significantly impact the employability of young people in India.
Providing Tax Relief for Salaried Workers: In India, salaried workers make up a significant portion of the tax base and are crucial to the nation's economy. In light of this, it is important to consider Income Tax Rules like Section 80JJAA (towards Net employment generation) to support job growth and creation. This section encourages employment growth in the nation by allowing businesses to deduct the costs of adding new employees from their taxable income. Increasing the number of employed people and paying taxes can support the economy and help create more jobs. Since 2014, the implementation wage has been capped at INR 25,000 per month, but it is necessary to revise this figure to account for inflation over the past eight years. An increase to INR 50,000 would be ideal for providing quality jobs and the benefits of economic prosperity to all. Additionally, this will lessen unemployment's financial strain on the Government and society.
Empowering SMEs and their Employees: Medium-Sized Enterprises (MSMEs) were among the hardest hit by the pandemic's onset. These businesses employ 1.8 workers per unit, and nearly 115 million workers do not have access to social security. This places them at a significant disadvantage regarding retirement planning, healthcare access, and other crucial aspects of financial security. Employees with coverage make significantly more money than those without, with a staggering difference in net take-home pay and employer costs of almost 30%. The states will benefit from more formal employment and enhanced ESIC and EPFO coverage, promoting investment in infrastructure and healthcare.
Extension of Production Linked Incentive (PLI) Scheme to Generate Massive Job Opportunities:
Labour Codes: As India holds the Presidency of the G20 this year, it is an opportune time to focus on implementing the four labour laws and addressing the country's labour and compliance challenges. These efforts should be prioritized by implementing the easier codes and engaging with all stakeholders to address the others. Therefore, this year should not be missed as an opportunity for implementation.
In India, the distinction between formal and informal work is often blurred, with many people working in the informal sector without legal protection or benefits. The World Economics' Quarterly Informal Economy Survey (QIES) latest report estimates that India's informal economy is 43.1 per cent of the total economy. Hence, there is huge potential for formalization in the next ten years, which would be decisive for the future of the youth and the country. The Union Budget 2023 can help aid this by allocating funds for programmes that create formal employment opportunities to protect workers' rights and provide them with social security. It would also boost economic growth and tax revenue, especially amidst unpredictable macroeconomic conditions. We ardently hope that the Government continues the good work so far and announces a Budget that accommodates the needs of the working class for a better India.
Views are personal. The author is President- Workforce Management, Quess Corp.
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