Budget Allocation For Modi's Employment Projects, And Their Reality

In a country grappling with economic challenges and unemployment concerns, the allocation of budgetary resources towards employment initiatives is a critical aspect of governance. The Modi government's promises of job creation through various projects have been met with both anticipation and scepticism. As the latest budget unfolds, we delve into the intricacies of the budget allocation for employment and the ground realities of Modi's employment projects.

While the government may tout an increase in overall expenditure, the devil lies in the details. The 2023 budget, in particular, has allocated a substantial portion to infrastructure development and healthcare, but the specificity regarding job creation is lacking. The absence of a dedicated allocation for employment projects raises questions about the government's prioritization of this critical issue.

Over the years, Prime Minister Narendra Modi has launched several ambitious employment projects, each promising to address the nation's unemployment crisis. Prominent among these initiatives are 'Make in India,' 'Skill India,' 'Mudra Yojana,' and 'Pradhan Mantri Rojgar Protsahan Yojana.' However, the reality on the ground paints a more nuanced picture.

Make in India

The 'Make in India' initiative, launched on September 25, 2014, aimed to boost manufacturing in India and stimulate economic growth through substantial investments in the sector. In its early stages, the initiative garnered significant investment commitments, positioning India as a top destination for foreign direct investment by 2015. However, as the country approaches another Union Budget, the much-anticipated initiative appears to be faltering, particularly in the face of economic challenges.

While the concept of 'Make in India' was not new, its ambition was to transform India into a global manufacturing hub. The objectives included achieving a 12-14% annual growth rate in the manufacturing sector, generating 100 million new manufacturing jobs by 2022, and increasing the sector's contribution to GDP to 25% by 2025. The strategy focused on creating an investment-friendly environment, developing modern infrastructure, and attracting foreign capital.

Over the past nine years, evaluations reveal a slow growth in overall investment, especially within the manufacturing sector. Private sector capital investments declined, contributing to the diminishing gross fixed capital formation of the private sector. Output growth in manufacturing, as reflected by the industrial production index, has been consistently low, with only occasional instances of double-digit growth. Concerns have also emerged regarding the delayed release and potential revision of employment data, indicating a failure to keep pace with the expanding labor market.

The 'Make in India' initiative faced criticism for policy casualness, with numerous scheme announcements lacking adequate preparation for implementation. The policies heavily relied on foreign capital and global markets, leading to inherent uncertainties. Moreover, an overly ambitious growth target, a lack of policy focus due to the inclusion of numerous sectors, and the ill-timed initiative in the context of global economic uncertainties and rising trade protectionism were identified as reasons for its failure.

In reality, 'Make in India' encountered challenges due to overestimation of growth capacity, lack of policy focus, and inadequate timing, reflecting inherent inconsistencies. The need for a comprehensive approach beyond policy window dressing is emphasized, recognizing that industrialization cannot be jump-started solely through legislative measures and investor conferences.

Skill India

The Skill India project, launched on July 15, 2015, by Prime Minister Narendra Modi, aimed to train around 40 crore people in various skills by 2022. However, numerous reports expose the failure and fraudulent activities within the program. 'Skill India' was envisioned as a solution to the unemployment crisis by providing skill development to the youth, making them more employable in various sectors. The idea was noble, but the execution has been marred by gaps in implementation. The disconnect between acquired skills and industry demands, coupled with the absence of a robust job placement mechanism, has left many trained individuals struggling to find suitable employment.

In her inaugural budget speech in 2019, Finance Minister Nirmala Sitharaman reaffirmed the government's dedication to the "Skill India" initiative, asserting that it facilitated millions in pursuing industry-relevant skill training to enhance their employment opportunities.

Contrary to the government's claims, an examination of unit-level data from the Periodic Labour Force Survey (PLFS) 2017-18 paints a bleaker picture. The data reveals that only a small fraction of the youth reported undergoing any vocational training, with a significant portion of them either unemployed or outside the labor force.

On a national scale, merely 1.8 per cent of the population reported having received formal vocational/technical training in 2017-18. Additionally, 5.6 per cent reported informal vocational training, encompassing methods such as hereditary, self-learning, and on-the-job training. This implies that a staggering 93 per cent of the population did not receive any form of vocational/technical training, be it from formal or informal sources.

Furthermore, the data highlights that the youth demographic (15-29 years old) constituted over half of those who did receive formal vocational/technical training. This stark contrast between governmental rhetoric and actual training outcomes underscores the challenges and gaps in the effectiveness of the Skill India initiative.

Mudra Yojana

The Skill India project, initiated in 2015 under the banner of MUDRA (Micro Units Development and Refinance Agency), promised to empower the economically disadvantaged, especially the youth, by providing hassle-free credit for their micro-enterprises and startups. Despite official claims of success, there are glaring shortcomings in the execution of the Pradhan Mantri MUDRA Yojana (PMMY).

MUDRA aimed to offer collateral-free credit up to Rs 10 lakh under PMMY, catering to a diverse range of self-employment activities through three loan categories: Shishu (up to Rs 50,000), Kishor (Rs 50,000 to Rs 5 lakh), and Tarun (Rs 5 lakh to Rs 10 lakh). However, the ground realities do not align with the lofty promises.

Macro-level data indicates that MUDRA facilitated loans to 310 million individuals, amounting to Rs 15.86 trillion between April 2015 and September 2021. Yet, closer scrutiny reveals that the average loan amount stands at about Rs 51,000, predominantly falling within the Shishu category. This indicates a failure to fulfil the promise of larger loans.

Furthermore, banks were already providing loans to micro-enterprises before MUDRA, and the distinction post-MUDRA seems primarily cosmetic, as loans are now labeled with MUDRA's seal. There are also complaints of banks demanding collateral for MUDRA loans, contradicting the notion of collateral-free lending. The absence of a specified interest rate raises questions about the credibility of claims regarding cheap credit.

In essence, the Skill India project, through MUDRA, has generated more hype than tangible impact. A critical review is imperative, addressing the actual challenges faced by the micro sector and implementing corrective measures to ensure adequate credit flow to MSMEs, especially microenterprises. Without such revisions, the refinance arrangement may not fare better than the pre-existing system.

Pradhan Mantri Employment Generation Programme

The Pradhan Mantri Employment Generation Programme (PMEGP) operates as an offshoot of MUDRA loans, wherein the government provides margin money while a bank extends the primary loan. Since its inception in 2016, the program has witnessed 12.3 lakh applications, with only 1.33 lakh proposals accepted. The PMEGP dashboard reports a total disbursement of Rs 3,649 crore in margin money from 2016-17 to 2018-19.

On average, each project received approximately Rs 2.7 lakh as a loan, with individual applicants securing Rs 8-10 lakh as the principal loan from banks. Government estimates suggest that for the years 2017-18 and 2018-19, 1.13 lakh sanctioned projects created 7.9 lakh jobs, averaging seven jobs per project. However, these figures are derived from bank loan applications, raising uncertainty about the actual employment impact—whether these represent new jobs or a mere shift of existing workers.

Other employment-related schemes, such as Deen Dayal Upadhyaya – Grameen Kaushalya Yojana and Deendayal Antyodaya Yojana – National Urban Livelihoods Mission, focus on skill training but have not significantly addressed the unemployment crisis.

Pradhan Mantri Rojgar Protsahan Yojana

The 'Pradhan Mantri Rojgar Protsahan Yojana' was designed to incentivize employers to generate new employment by contributing to the provident fund of new employees. While this initiative has seen some success, its overall impact on the employment landscape is constrained by the limited scope of coverage.

The formal sector, which benefits the most from this scheme, constitutes only a fraction of the total employment in the country. The vast informal sector, where a significant portion of the workforce is employed, remains largely untouched by the incentives provided under this scheme. A more inclusive approach is necessary to address the diverse employment challenges faced by the nation.

According to the information available on the PMKVY website until April 3, 2019, approximately 29.86 lakh young individuals had participated in Short Term Training (STT) courses. However, only 34.5% of them managed to secure employment afterward. Unfortunately, there is a lack of data specifying whether these individuals were new job seekers or if the acquired skills were directly relevant to the jobs obtained.

In the Recognition of Prior Learning (RPL) component, approximately 18 lakh individuals who were already employed received training. Surprisingly, only around 10 lakh individuals successfully obtained completion certificates. This group encompassed various professionals, including those working at petrol pumps and household maids. Some participants were seemingly compelled to attend classes briefly to inflate training numbers.

The third component, named Special Projects and overseen by government agencies, enrolled over 90,000 participants. However, less than half (42,000) successfully completed the training, and only a mere 18,862, roughly 20%, found placements.

The ambitious target of reaching one crore by the next year appears to be a distant aspiration. The evident challenge lies in the absence of available industrial or service sector jobs, making self-employment equally impractical. Simply providing training without addressing the lack of viable job opportunities seems to be a disservice, creating a facade rather than offering a substantial solution.

Reality Check and the Need for Reassessment

Despite the government's claims of success in employment projects, the ground reality paints a different picture, with persistently high unemployment rates and a widening gap between promises and outcomes. A critical reassessment of these initiatives is crucial, focusing on key areas that demand attention.

There is a pressing need for real-time industry alignment. The success of employment projects relies on their adaptability to the ever-evolving job market. Conducting a thorough analysis of industry requirements and ensuring regular updates to skill development programs is imperative to bridge the existing gap between job seekers' skills and employers' demands.

Strengthening social safety nets is essential. The absence of a comprehensive safety net exacerbates challenges faced by the unemployed. The government should invest in building a robust safety net, encompassing unemployment benefits, retraining programs, and support for marginalized communities disproportionately affected by job losses.

Promoting innovation and technology is paramount. The digital era has transformed the employment landscape, and the government should foster an environment that encourages innovation and embraces emerging technologies. Initiatives focused on digital literacy, artificial intelligence, and other cutting-edge fields can create new employment opportunities, especially for the youth.

Inclusive economic growth is crucial. While large-scale projects and industries receive attention, the informal sector should not be overlooked. Policies need to uplift and formalize the informal economy, recognizing its significant contribution to employment. Inclusivity should be at the core of economic policies, ensuring that the benefits of growth reach all segments of society.

As the budget allocation for employment and the efficacy of Modi's employment projects come under scrutiny, it is evident that a comprehensive and strategic approach is required to address the nation's unemployment challenges. The government must go beyond rhetoric and take concrete steps to bridge the gap between promises and outcomes. A collaborative effort involving industry stakeholders, policymakers, and the public is crucial to achieving sustainable and inclusive employment growth. The road ahead requires bold reforms, innovative solutions, and a commitment to ensuring that the dividends of economic progress reach every corner of the nation.