India matters. A potentially lucrative market, a growing knowledge economy, and a supplier of skilled professionals world over – the youth and the rising middle class are key ingredients of this story. And the 2024 budget reckons this! While employment, skilling and MSMEs take centre stage this year, one is struck by how the announcements build upon the solid foundation laid down over the last decade – digital penetration, financial inclusion, infrastructural development and achieving universal availability for  basic amenities like housing, water, sanitation and energy. Poised to build on these advancements, the common theme across this year’s budget is unlocking India’s vast human capital to drive employment-led growth. Thrust to capital expenditure, schemes for enhancing credit accessibility to MSMEs specifically in manufacturing and the PM’s package of five schemes to enhance employment and employability are all steps in the right direction. But beyond what meets the eyes, there are many unheralded and yet important efforts that merit deeper discourse. 

A holistic approach to infrastructure

While always a top priority for this government, infrastructure development this time is being seen not just as a means to catalysing industrial expansion but as a pathway to securing livelihoods as well. A 116% increase in budgetary allocation on Women Safety on Public Road Transport from last year and plans to enhance workplace infrastructure like women’s hostel and creches are critical to unlocking their productive capacities. Additionally, dormitory-type rental accommodation for industrial workers should enhance their workforce participation and productivity. In line with enabling businesses from peri-urban and rural areas, the budget envisages a coverage of 25,000 rural habitations under the next phase of rural road expansion and the focus on last-mile connectivity through a 72% higher allocation on Works under Roads Wing from that of 2022-23. Impetus to digital infrastructure too is signalled by the budget through a significant increase in cyber security budget and consistently rising allocation to MeitY over the past five years. Allocation towards rural digital literacy programme under the capacity building component of Digital India is slated to further the participation of rural businesses in the digital economy.

Enhancing export competitiveness

While total allocation under the Export Promotion Schemes has come down, a number of announcements in the budget allude to enhancing export competitiveness, especially for MSMEs  and labour-intensive industries. An outlay of 119.47 crore has been earmarked for SEZs with an objective to promote exports. The plans to set up e-commerce export hubs in partnership with private players will help plug MSMEs as well as local, traditional artisans already supported under the PM Vishwakarma scheme into the global value chains. Employment-linked incentive will lead to an overall reduction in labour costs while the credit guarantee scheme for MSMEs will help them scale up, thus enhancing their global competitiveness. The reduction of customs duty on products used as inputs in sectors like textile and leather and the extension of the PLI scheme to food processing sector, all of which are highly labour intensive and important from an export perspective are welcome steps.. These are particularly important as India has been losing out to more competitive countries in these sectors in the past few years. Finally, the focus on green energy transition for MSMEs will make them export competitive in the era of greening of supply chains. More importantly and in line with the Economic Survey, this will allow the government enough elbow room to follow its own emission reduction approach as opposed to the path foisted upon the developing countries by developed economies who are surely responsible for the present environment crisis and have so far shown extreme reluctance to bear the financial burden.

Creating an army of relevant job seekers

The budget for skill development and capacity building in each of the ministries have either remained the same or have been enhanced this time. This includes an increase in allotment for the skilling of minority women under PM VIKAS and a push to tribal enterprises under the PM Janjatiya Vikas Mission. The allocation of ₹1.48 lakh crore towards education and employment, the skilling scheme with the aim to train 20 lakh youth in the next five years, and the plans to upgrade 1000 Industrial Training Institutes will help create an industry ready workforce. These announcements alongside the provision of internship opportunities to 1 crore youth in the coming five years will not just enhance employment opportunities but also help firms access a skilled and productive labour pool by improving the employability of job seekers

Some Misses Among the Many Hits

Amongst the many hits, however, there a few misses. Focus on exports remains incomplete without adequate attention to standards and quality checks. Barring electronics and IT products, budgetary provisions for quality testing and certifications are found wanting. The budget does not talk about making available adequate support to MSMEs through knowledge resources or testing infrastructure in order to manufacture export-grade products. Contradictory to the government’s well stated objective of enhancing e-commerce exports, the allocation towards Postal Operations that entails infrastructural upgradation and setting up of Dakghar Niryat Kendras for e-commerce exports has been significantly reduced. Furthermore, despite the budget’s emphasis on MSMEs as growth catalysts and job creators, little has been said about improving their ease of doing business. The insurmountable compliances and regulatory burdens faced by small and medium enterprises in their quotidian activities continue to plague their competitiveness in the global markets and hinder their expansion plans. In addition to delivering on the budget promises, it will be important to keep these in mind as the government plans to carve a path of growth built on harnessing India’s significant demographic advantages and the country’s true productive capacity.

(The author is grateful to Dr. Rajiv Kumar, Chairman, Pahle India Foundation and Former Vice Chairman, NITI Aayog for his feedback)

– Sakshi Abrol
Visiting Fellow at Pahle India Foundation & Doctoral Researcher, University of Bonn
Rashtram PBC 2018 Alum