The impact of the pandemic that adversely affected many aspects of life has shaken the employment scene also. Though many indicators are showing that the situation is coming to normal, it was expected that the government through the Budget statement to pave way for aiding this process which could bring back the confidence in the lives of people. Has Budget 2021 succeeded in this aspect? Let’s check what it promises with regard to job creation.
Production Linked Incentive Scheme – A Major Anchor in Job Creation
Budget 2021 committed a financial outlay of ₹1.97 lakh crore in the next 5 years starting FY 2021-22 for PLI schemes in 13 Sectors. The PLI schemes not only steer many companies in the process of shifting their base towards India, but also encourages Indian companies to shape a renewed growth story. In the process, it promises self-reliance for India in many crucial sectors like pharma and electronic manufacturing. In this journey of making India self-reliant, the companies that operate under PLI scheme naturally create millions of jobs.
For those who think that the jury is still out on how PLI scheme will pan out, it is important to know that even before the Budget 2021, PLI schemes the government introduced in certain sectors received a stupendous response. To quote an example, the government has already cleared 10 companies for mobile phone PLI scheme while another 6 companies were approved under the Specified Electronic Components Segment. You may read more in our earlier article Production Linked Incentive Scheme – Responses for Pharma and Mobile Phone Sector Give A Big Thumbs Up.
Jobs to Boom in Textile to Make India an Export Power
For textile, in addition to a PLI scheme, Budget 2021 has announced a scheme of Mega Investment Textiles Parks (MITRA). Seven Textile Parks will be established over the next 3 years.
Textile sector employs millions of people, being a labour-intensive industry. Further strengthening of this sector has come at the right time through this budget. Recent trend should be put in context to understand how India is acting at on right time to harness the employment opportunities in the textile sector. In the light of the pandemic situation, many apparel brands started shifting of their manufacturing units from China. Also, India showed high end skill in this segment with its fantastic success on PPE kit manufacturing. It is here that Budget 2021 has made a much-needed intervention through the announcement of MITRA and PLI schemes.
Announcing the measures, FM Nirmala Sitharaman said that “This will create world class infrastructure with plug and play facilities to enable create global champions in exports.”
Infra – Building Jobs as Well
The big push in infra, which is very evident in Budget 2021, will create jobs in various ways. Starting from demand for labour to demand for machineries and the demand for building materials like cement and iron, infrastructure building will always create jobs for people in many domains.
As explained in our earlier article, the plans envisioned in Budget 2021 in infrastructure sphere have spread across the states and regions, thereby promising job distribution also across the nation.
How Industries Empowered to Create Jobs
Allocation to MSME sector doubled to ₹15,700 crore. Along with the PLI scheme, increase in duties of many imported items will in turn help the indigenous MSMEs to thrive.
To provide relief to metal re-cyclers, mostly MSMEs, duty on steel scrap was exempted for a period up to 31st March, 2022. Further, to provide relief to copper recyclers, the duty on copper scrap has been reduced from 5% to 2.5%.
Budget 2021 sought to rationalize exemption on import of duty-free items as an incentive to exporters of garments, leather, and handicraft items. Almost all these items are made domestically by MSMEs. Exemption on imports of certain kind of leathers have been withdrawn as they are domestically produced in good quantity and quality, mostly by MSMEs. Customs duty on finished synthetic gem stones raised to encourage their domestic processing.
Budget 2021 has also sought alternate methods of debt resolution and special framework for MSMEs.
It is natural that all these reprieves that the sector got will naturally result in job creation.
Tax Benefit for Start Ups
An extension provided for claiming tax holiday for start-ups by one more year – till 31st March, 2022. Further, in order to incentivise funding of start-ups, the capital gains exemption for investment in start-ups also stand extended by one more year – till 31st March, 2022.
In a measure which directly benefits Start-ups and Innovators, the incorporation of One Person Companies (OPCs) has been incentivized by allowing OPCs to grow without any restrictions on paid up capital and turnover, allowing their conversion into any other type of company at any time. Also, there has been a reduction in the residency limit for an Indian citizen to set up an OPC from 182 days to 120 days, and Non-Resident Indians (NRIs) can now also incorporate OPCs in India.
When Start Up eco-system grows, it will generate jobs and accommodate talents.
Skilling India – Key to Seizing the Initiative
Skilling is an important aspect for the growth and sustainability of job market. Building on the National Apprenticeship Promotion Scheme 2016, Budget 2021 has sought to amend the Apprenticeship Act with a view to further enhancing apprenticeship opportunities for youth. ₹3,000 crore has been set aside for aligning the existing scheme of National Apprenticeship Training Scheme (NATS) for providing post-education apprenticeship, training of graduates and diploma holders in Engineering.
Budget 2021 highlighted another ongoing initiative, in partnership with the United Arab Emirates (UAE) and Japan, to map the skills of Indian workers and provide them with requisite training so that they can find opportunities in those countries.
You may also like to read: A Tale of Few Cities, A Passage to Rural India and More: These Infographics Demystify Budget 2021