The government is confident of launching the schemes in the Prime Minister’s package for employment and skilling announced in last week’s Budget within this financial year. That includes the internship program for one crore youth in 500 top companies, whose design details will be worked out in consultation with the industry, Finance Secretary T.V. Somanathan said.
“We expect all of these schemes to start off within this financial year… We have tried to make sure the coverage of the employment-linked incentive schemes is, as far as possible, widespread, and not tried to make technological, sectoral choices. While Scheme A and C are for all industries, Scheme B is for manufacturing jobs,” Mr. Somanathan told The Hindu.
High salary cut-off
The top Finance Ministry official also said that the decision to incentivise hiring for first-timers with a salary limit of ₹1 lakh per month was aimed at keeping the schemes sector-neutral. “I agree ₹1 lakh is high, but it’s not so if you’re trying to cover the hiring of people with sophisticated skills, or knowledge of AI [Artificial Intelligence],” he said, adding that the schemes could spur new jobs in areas under threat from the advent of technologies like AI.
Also read | ‘Capital gains is the fastest growing income class, can be taxed higher’
Referring to the recent tendency of large tech firms to defer joining dates for fresh recruits, the Secretary said that it was precisely for this reason that the government did not want to exclude such people. “We don’t want to leave out the services or any sector from possible incentivisation if it will create jobs. We don’t want to focus only on employees who draw up to ₹25,000 a month. You can pay the employee even one lakh, but our fiscal outgo is limited to the ₹25,000 level, but even 24% of that works out to 12% of a ₹50,000 salary, which is still a substantial subsidy,” he emphasised
“We don’t know where these salary figures stop. In some of these industries, even fresh hires get more than ₹50,000 to ₹60,000. But we have capped our outgo so the incentive is strongest for those earning ₹25,000,” the official noted.
‘Nothing to lose’
The new scheme to facilitate internships for youth in the age bracket of 21 to 24 years has no connection with the Pradhan Mantri Kaushal Vikas Yojana 4.0 announced in the Union Budget for 2023-24, and will be administered by the Ministry of Corporate Affairs, not the Ministry of Skill Development, Mr. Somanathan underlined.
“While the Skill Development Ministry will be involved, this is very different,” he said, stressing that the scheme is voluntary and will not require firms to invest funds from their own pockets, but rather through their mandated corporate social responsibility (CSR) spends, combined with government resources.
“This particular scheme has not been discussed with industry chambers, but they have repeatedly said they are willing to collaborate on skilling because they see it as a national problem. We think many companies will respond positively. They have nothing to lose and everything to gain,” he averred, adding that firms are not expected to hire these interns.
Bridging the gap
“We are also open to the company doing the skilling through companies in the backward or forward supply chains, if they can’t do it themselves. We will work out the details. It’s an innovative approach and there will be design challenges. But I think we have to do something innovative to bridge the gap [between skill sets of the young and industry needs] and break this barrier,” Mr. Somanathan underlined.
The employment prospects of these interns will improve after their resumes, which previously said ‘no experience’, can add a year-long internship with a big company, Mr. Somanathan pointed out.
“This is a space where frankly, while everybody agrees that something is to be done, very few people have concrete ideas on what can the government do to promote employment. We are relying on basic micro economics, that a subsidy triggers additional expenditure in the item which is subsidised,” he summed up.
Edited excerpts:
‘The trajectory of the road is downhill in terms of debt to GDP’
The Budget’s push for job creation is welcome, but a key reason for firms to hire is a rise in demand and capacity utilisation levels. Economists feel the consumption push is limited.
Well, there is a moderate tax cut for the salaried class mainly, but also for others to a lesser extent. There is a continued push on capital investment. There is a big push on schemes like the PM Gram Sadak Yojana [rural roads], the Awas Yojana [housing], both rural and urban. These are big spenders in rural areas and there’s a big expansion with the former covering 25,000 more habitations. This is spending in rural areas by rural people who are employed in these roles. So, there is quite a big trust there. Similarly, the three crore new houses coming in, of which two crore would be in rural areas, is also actually a big trigger of consumption. So, I would argue there are measures here to trigger consumption, but they are not in the nature of direct cash transfers. They are consumption measures that act through creation of assets. By the way, the employment incentives, when paid, will also result in some consumption. So it is consumption through some desirable objective rather than consumption through just transfer of cash, for the sake of consumption.
What about measures to rein in food inflation, that has been spiking overall price rise?
Whatever can be done on food inflation is being done. There’s one important point which has not been very much highlighted which in the Budget — a substantial provision for the Price Stabilisation Fund with the highest ever allocation [₹10,000 crore]. We intend to use this more aggressively on the procurement of pulses and oilseeds, building up an adequate buffer stock in years of low prices, and then releasing it at times of high prices. This is an initiative to stabilise food prices, particularly on pulses and oilseeds. And we mean business about procuring it at MSP [Minimum Support Price] for these items. Once we do that, farmers will tend to shift… We hope to see an expansion in the production of these items and reduce the volatility in those prices.
For Andhra Pradesh and Bihar, you have provided funds for some projects, and promised to arrange funds for others…
These will be only through concessional multilateral loans, which could be from the World Bank, Asian Development Bank, JICA, AIIB… any of these institutions, which considerably extend assistance to India anyway. They will lend to the Government of India, and the GoI will on-lend to the States, just as with any multilaterally-funded projects in States. The banks are willing, and we will be able to tie it up. Building of a capital is very much an infrastructure activity. We have not discussed [any interest subvention for the States] yet.
The Budget pivots from targeting the fiscal deficit after 2025-26, to a focus on the debt to GDP ratio. Would this entail a goal like reaching 40% of GDP over time?
It may not necessarily be 40%. We are saying it will decline gradually, how far and how fast, we are yet to determine, but it will be on a declining path. So, after 2025-26, when we will be below 4.5% of GDP and that’s a commitment, the intention is that it will be below 4.5% definitely. But what will be the deficit will also depend on how much we need to keep the debt going down. Should the debt go down by x% and when should it reach what level, those are yet to be determined. So, the deficit will be under 4.5%, but it doesn’t necessarily mean it would be 3% of GDP. And we can afford more than 3%, and still keep the debt declining steady. So that is the change of approach.
Will we have a road map for it or we will take a view each year?
That’s something we will come up with. But we are saying one thing very clearly, that road map will be downwards. The trajectory of the road is downhill in terms of debt to GDP… how fast, what’s the gradient, will be [determined] on a year-to-year basis.
month
Please support quality journalism.
Please support quality journalism.
Budget 2024: New job schemes to kick off this year, says Finance Secretary T.V. Somanathan #Budget #job #schemes #kick #year #Finance #Secretary #T.V #Somanathan
Source Link: https://www.thehindu.com/business/budget/budget-has-steps-to-trigger-consumption-but-they-are-not-in-the-nature-of-direct-cash-transfers-says-finance-secretary-tv-somanathan/article68457785.ece/amp/
Budget 2024: New job schemes to kick off this year, says Finance Secretary T.V. Somanathan – Notice Important Online
#Finance – BLOGGER – Finance, Budget, Finance, Important, Job, kick, Notice, Online, schemes, secretary, Somanathan, T.V, year
