This year’s Budget is one of the most anticipated. While different segments of the population have various expectations from the Finance Minister, it is imperative that he undertakes measures that will propel urban and rural growth, and generate jobs, thus bringing down unemployment in the country.
To that end, I would make the following proposals, if I were the Finance Minister.
Increase investments in the services sector (especially IT) in the semi-urban/ rural areas. Currently, the IT sector isn’t very keen on opening offices in Tier II and Tier III cities. Among a host of contributing factors, the one that stands out the most is poor infrastructure. Hence, increased direct and indirect investment (such as in infrastructure) in the rural service sector would be a prominent feature of this policy.
Investment in service sector would have multitude of benefits, including generating employment, contributing to tax revenues, reducing migration, and empowering rural youth.
Employment exchanges :
Industry has grown by leaps and bounds, and the number of people in the skilled workforce too is on the rise. Yet, there exists some information asymmetry in our job markets, which contributes to high level of unemployment.
To tackle this, I propose establishing ‘Employment Exchanges’, where potential candidates and recruiters meet at a common forum to hire for a host of jobs ranging from entry-level trainee to a top management employee.
This policy would involve establishing new exchanges and developing the already existing ones.
Integrate vocational education with industries
There is an urgent need to build vocational educational institutions because of the prevalence of disguised unemployment. These institutions can produce ready-to-work employees when integrated with industry and it makes economic sense. This will also help industry recruit suitable candidates and ensure job security for them.
Improve agro-industry linkages
The agriculture sector is expected to report improved levels of output in the near future and hence, there is a lot of scope for improved agro-industry linkages. Both industry and the agriculture sector would benefit in terms of revenue as well as employment.
Existing players such as ITC have set a good example but others haven’t been able to emulate the model. An investigation into and improvement in the conduciveness of these linkages would encourage more companies to make inroads into rural economies.
Promote rural entrepreneurship
The slew of innovations we see today give us a glimpse of what Indian youth is capable of. In line with this, I propose promoting rural entrepreneurship by setting up venture capital funds and business enclaves that cater to the rural masses.
Once approved by a competent authority, government support can also be provided to take forward the business (financially or otherwise). To encourage this, increased investment in rural infrastructure is necessary.
Establishing Town and Village Enterprises (TVE)
Learning from China, we can set up Town and Village Enterprises (TVE) in rural Indian. A TVE is a market-oriented public enterprise that comes under the purview of local governments and is based in towns and villages.
One of the reasons for China’s rapid growth, these institutions aim for development centred on rural economy. With a unique ownership structure, this business model is worth emulating in India. Allocating funds for setting up TVEs would bolster the rural economy and reduce unemployment.
Incubation centres in villages
There is a growing need to cater to the capital and managerial requirements of the rural entrepreneurial sector. To provide for the same, I propose setting up rural-industrial incubation centres, which will act as a breeding centre for emerging rural companies.
This will also involve giving incentives to angel investors, seed capital providers, and taxation benefits to companies as well as individuals employed in these places.
Build second capital in all States
Instead of building a lot of smart cities, my government would work on a simpler, more achievable goal — setting up a second capital in all the States, which would solve a multitude of issues ranging from regional disparity and skewed urbanisation to reducing pollution and traffic congestion.
It would, as a result, promote economic growth in one of the new tier II cities (almost 28 new cities in total) in the whole nation and result in job creation. Investing in building the new city would be undertaken to give impetus to this policy.
Special taxation laws for start-ups
The growth of new-age entrepreneurs is hard to miss. But the existing policies aren’t very conducive when it comes to the taxation aspect of start-ups. To make the situation better, I would propose a start-up friendly tax package to provide them some relief during the initial stages of business.
Tax rebates for industrial expansion of employment
To encourage those industries who recruit a substantial portion of new employees as a part of their restructuring, I propose to provide them tax rebates that are more attractive than the existing ones. This would encourage them to push their recruitment drives further and thus help reduce unemployment.
(The writer is pursuing his second year Fellow Programme in Management (Economics Area) from IIM Kozhikode)