'Budget is Nondescript, Not What India Needs; Steps to Generate Jobs Barely Scratch the Surface'

"A nondescript budget - not what the country needed"; steps to increase employment will "barely scratch the surface": Pronab Sen to Karan Thapar for The Wire. ........................................... 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. Join The Wire's Youtube Membership and get exclusive content, member-only emojis, live interaction with The Wire's founders, editors and reporters and much more. Memberships to The Wire Crew start at Rs 89/month.    / @thewirenews