The rising level of unemployment is one of today’s primary concerns. According to the Centre for Monitoring Indian Economy (CMIE), the urban unemployment rate reached an all-time high last year and closed at 8.91 per cent in December. There are two sides to the unemployment issue.
On the demand side, the economic slump is evident, with many companies shutting their doors to new hires, and others laying off a huge number of employees. The Centre’s single-point focus for this year’s Budget should be to create more jobs. For this, it is imperative that the government invites further private participation in infrastructure projects. Household savings should be channelled into these projects, incentivising such investments with tax relief.
While the Insolvency and Bankruptcy Code and disinvestments are welcome as they seek to disincentivise operational inefficiency and instil better cash discipline, these measures have to be counter-balanced by ease of doing business through initiatives such as faceless tax proceedings, streamlining labour laws and fast-tracking incorporation.
Helping start-ups
The start-up industry, which can potentially employ a majority of the millennial population, needs to be provided with a conducive ecosystem. Budgetary allocations to the ‘Startup India’ programme need to be increased from the existing ₹25 crore apportioned in the previous Budget. Clarity on the cases pending in court on account of angel tax levy should be provided so that investors are not deterred from funding them, and genuine cash-strung start-ups do not suffer from an early setback. Tax incentives should be given to VCs and incubators to provide start-ups more support during the initial stages. Current success rate of start-ups stands at a dismal 10 per cent.
Sector-specific relief in the form of GST concessions to the promising (electronic vehicles, technology, e-commerce) and worst-hit (real-estate, retail, metals, auto) sectors should be granted to boost demand in these industries which, in turn, will increase employment opportunities. Additionally, for real estate, in view of slow-moving inventory in the sector, the mandated reinvestment period both before and after the sale of the residential property should be extended by at least a year each. This will give homeowners great relief and push up real-estate demand.
Addressing the skill-gap
On the supply side, greater government intervention is required at the grassroots level to provide an equal platform for all by increasing the opportunities for vocational training in order to bridge the skill gap.
At the primary school level, a higher allocation is required to increase the reach and quality (tech-enabled classrooms) of education. Further, all educational institutes, whether or not charitable, should be exempted from income tax if they are engaged solely in imparting primary education, especially in backward regions of the country.
With the trends towards automation, AI and robotics; the proportion of skilled vs unskilled labour required has changed. This requires that the youth get the relevant skill-based training. For this, the thrust should be on digital education and vocational training through a higher budgetary allocation to Industrial Training Institutes (ITI) and skill centres. Specific tax incentives should be granted for CSR spending in the education and skilling sector.
Lastly, as a citizen soon to enter the salaried class, I expect the Centre to incentivise higher earning and bolster private consumption by increasing the maximum income-tax slab taxable at 30 per cent to ₹15 lakh from the existing ₹10 lakh. This aside, the exemption window on education loans should be extended to the life of the loan and not restricted to the existing eight years.
As India moves to achieve its target of a $5-trillion economy by 2025, these measures are much needed for the country’s demographic dividend to really accrue.
(The writer is a student at the Indian School of Business.)