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Will India’s transition to the world’s factory floor boost up job generation?

Numerous legacy issues in India impede job creation. Some recent budgets have taken small, progressive steps to address them. Will the upcoming Budget build on those steps, or will it represent a massive reform leap forward? The response will be available on February 1.

With India set to dominate China to become the world’s largest country with a population, pre-budget discussions on job creation have taken on added importance this time. Budget 2022 outlined a plan to create six million new jobs in 5 years. A year later, the results are, at best, mixed. According to the most recent data, our rate of unemployment is still superior in comparison to emerging economies. Many believe that India is still in a period of jobless growth.

Will India's transition to the world's factory floor speed up job generation?

According to information from the Centre for Monitoring Indian Economy (CMIE), the rate of unemployment rose to 8.30% in December, the highest level since the countrywide Covid lockdowns in March 2020. The rise in unemployment adds to the government’s already problem of finding work including over 10 million youths who enter the labor force each year.

Is the data completely depressing?

However, it’s not like all recent statistics are depressing. According to Naukri JobSpeak, one of the top tracking systems of employment trends in India, the country’s job market recovered to pre-festive stages in November, growing by 27% month on month. As per TeamLease information, hiring opinions in the services industry is strong for Q4, with 77% of companies interested in new hires.

In addition, the rate of employment has risen in December to 37.1%, the highest level since January 2022. These figures may have seemed rigorous, and although sector-level data depicts mixed reactions, compared to the hiring boom that came to focus during the first half of the year.

How has the pandemic affected the rate of employment?

After being nearly vanished in 2020, employment rates have now regained but are yet to restore to pre-Covid levels. In October, there were 14 million fewer staff — 4.5 million lesser men and 9.6 million lesser women — than in January 2020.

Furthermore, while hiring for multiple industries looks fair and beneficial, external circumstances — currently noticeably undesirable and likely to remain for a considerable time — jeopardize the employment situation in India. Export-oriented industries, many of which are major employers, will not contribute much to job creation until global trade is restored, according to experts.

Global headwinds could pose a problematic situation for India in terms of job creation because export-led growth is a key pillar underpinning India’s move to dominate the world as the world’s largest new factory with the help of PLI and Make in India.

Will India's transition to the world's factory floor speed up job generation?

Overall, there is a question if there exists any appreciating subjective in the employment scenario. It’s still an uncertain time for a country that fear will blow its much-touted population — a territory in which employment growth has lagged behind that of the working-age population.

65% of the Indian population is under the age of 35. The efficient use of this manpower is crucial for growing towards the next level of development. If India is unable to productively employ this growing pool, it will be unable to transform the figures into a dividend. Jobless growth and the demographic dividend have indeed been discussed for several years, and they inclined to become hot topics around recent budgets. However, the concern appears to have taken on added urgency this year.

Who controlled the job narratives?

For a long time, the jobs narrative has been controlled by Make in India and PLI — two government policies on which economists have placed high hopes for job creation.

The PLI plan is regarded as having the ability to change India’s job market. The goal is to create local manufacturing competition internationally, create global manufacturing champions, refuel exports, and create jobs.

Will India's transition to the world's factory floor speed up job generation?

Thus far, the program has been implemented in 14 sectors with a total investment of Rs 2 lakh crore. Vehicles and automotive parts, white goods, pharma, textile products, foodstuffs, high-efficiency solar PV modules, specialty steel, and advanced chemistry cells are among the industries represented.

PLI encourages domestic manufacturing in strategic growth sectors in which India has an advantage. The goal is to create internationally competitive manufacturing ecosystems by facilitating domestic industry — in other words, a policy that can boost job creation.

According to the government, Make in India, a policy introduced to transform India into a global manufacturing hub, has surfaced as a power multiplier to offer the country’s manpower new livelihood options. The policy will have been in effect for 8 years in Sept. 2022, and it has resulted in notable accomplishments, including significant job creation, in 27 sectors, according to government data.

According to the most recent official figures, it seems that PLI has received a justified response from industry and has effectively supplemented Make in India in putting the economy on the path to a job boost.

The advantages of PLI are anticipated to start manifesting in the real world this year because the project executions begin. So far, approximately 4,50,000 jobs have been created as an outcome of PLI. This is only a small portion of the 60 lakh jobs which the government hopes to create, but it is an encouraging start.

Existing issues and potential budgetary solutions.

While Make in India and PLI appear to be very good on paper, there are several obstacles that these schemes must overcome before they truly deliver. More than two and a half years after its inception, PLI still has a long way to go toward its objective of becoming a global manufacturing hub.

Several old issues related to conducting business in India appear to have persisted. According to reports, the paperwork procedure has yet to be genuinely simplified, causing delays in the establishment of factories.

The already existing problems.

Furthermore, several of India’s old infrastructure bottlenecks remain. These include a dearth of powerful and robust supply chains (in high-profile PLI sectors such as electronics), shaky logistics, and so on. All of this means that PLI’s true job-creation potential remains unknown.

The problem with Indian Education System. 

One of India’s major issues is its inefficient education system. In the decades since independence, the only thing a typical educational institution has been nice at is generating low-skilled government office workers. Education is a real priority area, and Budget 2023 cannot afford to pass up the opportunity for major reforms. This is particularly true in rural areas, which are home to the massive majority of Indians.

Will India's transition to the world's factory floor speed up job generation?

Industry requirements are diversified in a vibrant economy like India. However, our ancient system of education has clung to the past, undermining the industry’s ability to create jobs. After all, it is difficult for ambitious future policies to meet expectations in a country where businesses can only desire but never find enough workers with the necessary skills to operate mills.

This Budget must consider ways to make education more job-oriented for Make in India and PLI to accelerate India’s progress. There is a need to steer the entire system toward vocational education, which automatically improves employment prospects.

The need for upgrading and evolution in digital skills.

But not simply any vocational education. Correct skilling, such as digital skills, is required so that job seekers have what companies require in today’s world. Manufacturing and agriculture, both of which have long-standing issues with under- and over-employment, are notable laggards in terms of contributing to new job creation. In these two areas, there is an urgent need to create more decent jobs and raise income levels. Manufacturing, in particular, is highly labor-intensive, implying that there is enormous potential for job creation. Budget 2023 has a task ahead of it.

Why is the emphasis on rural India needed?

In terms of jobs, this Budget should place a greater emphasis on rural India. Agriculture has stalled as a major employer for understandable reasons; it is unable to accommodate any additional workers meaningfully. More than two-thirds of Indians continue to live in rural areas.

This means a lot of people, but not enough skills. The budget should investigate ways to move jobs to the countryside. Introducing reforms to urgent attention and revamping education to produce job-ready labor could be one possible remedy. Providing incentives for businesses to establish rural bases could be the other.

The last call.

Upcoming budgetary incentives for private companies are critical because the public sector is already capable of creating new jobs. Other persistent issues impeding job creation by industry include insufficient infrastructure, a stark male-female gap in worker participation, a labour code that hangs fire,  overdependence on the services sector, income disparities and poverty, widespread regional imbalance, and so on. Such problems have long been noticeable to all.

Some recent budgets have taken small, progressive steps to address them. Will Budget 2023 easily create on those steps, or will it represent a massive reform leap forward? The response will soon be highlighted.

Edited by Prakriti Arora

Priyanka Chakraborty
Priyanka Chakraborty
Chakraborty is a Digital Journalist at Inventiva who drafts content on current social topics. Her forte is documenting opinionated content based on data, facts, and numbers while adhering to media ethics, which go beyond simply crafting news headlines. Her core intent in writing such content is that every word her viewers read should give meaningful insights to their time spent on the articles.
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