India has 63.38 million unincorporated non-farm MSMEs, with 19.66 million in manufacturing and 23 million in trade activities. (Mint)
India has 63.38 million unincorporated non-farm MSMEs, with 19.66 million in manufacturing and 23 million in trade activities. (Mint)

Government sets the ball rolling to create more jobs and attract investments

  • PM Modi, who chairs NITI Aayog, will consult chief ministers next Saturday on issues affecting farmers
  • Filling up the vacancies at universities in India, including IITs, will mean adding nearly 100,000 jobs

NEW DELHI : In its second term, the Narendra Modi administration has set up two cabinet committees to prioritize and seek solutions to two critical issues: creating new jobs and boosting investments.

The National Democratic Alliance (NDA) government, which returned to power last month with a landslide victory, wants to address economic headwinds head-on as it enters the budget session of Parliament that begins on 17 June.

A government official confirmed on Wednesday the setting up of the ministerial panels on “investment and growth" and “employment and skill development" that are led by Modi. An official notification was expected to be issued over the next few days, said another government official. Both of them spoke on condition of anonymity.

News agency ANI reported on Wednesday without citing a source that home minister Amit Shah, finance minister Nirmala Sitharaman and railways and commerce minister Piyush Goyal are part of both the panels.

Modi, who chairs policy think tank NITI Aayog, will consult chief ministers next Saturday on issues affecting farmers. The hectic consultations precede the Union budget for FY20 that Sitharaman will present on 5 July.

At its first meeting last Friday, the NDA government expanded the scope of its income support scheme to all farmers irrespective of their landholdings. The government is now seeking to secure long-term solutions to rural distress afflicting India, with low prices for farm produce.

With a high unemployment rate, a group of central ministries has started working on how to create new jobs or an environment that will spur employment generation.

In the first week of the NDA regime’s second term in office, at least four ministries, including human resource development (HRD), micro small and medium enterprises (MSME), skill development and entrepreneurship, and food processing have started reviewing their efforts on job creation.

The government has little time to lose in revving up economic growth and to deliver on the promise of doubling farmers’ income.

Official data released on 31 May showed that Asia’s third-largest economy had expanded at 6.8% in FY19, slower than the 7.2% in the previous year. It, however, had some silver linings—manufacturing output and construction activities expanded faster in the just concluded fiscal from a year earlier. A slowing economy and tax revenue shortfall will also mean policymakers have to explore new ways of raising resources to finance welfare schemes.

“Mobilization of revenue has to go hand in hand with getting more efficiency in expenditure," said Rajat Kathuria, director and chief executive of think tank Indian Council for Research on International Economic Relations.

The HRD ministry on Tuesday reviewed the current situation and decided to expedite filling up of vacancies in universities and colleges and step up job-linked vocational education. As the first step after the meeting, the University Grants Commission (UGC) wrote to all universities to fill up vacancies of teachers on priority.

Universities in India, including the elite Indian Institutes of Technology (IITs), are operating with faculty shortages ranging from 15% to 45% for several years. Filling up these vacancies will mean adding nearly 100,000 government jobs.

“Shortage of quality teaching faculty in higher educational institutions is a major concern and requires to be addressed immediately for improving the quality of higher education," UGC said in its letter to universities. Mint has reviewed a copy of the letter dated 4 June. It also reminded all institutions of the recruitment guidelines and time frames. The letter further urged institutions to “ensure that vacancies in universities as well as colleges affiliated are filled at the earliest". The ministry has also asked institutions to fill up vacancies within six months from the day they start the hiring process.

MSME minister Nitin Gadkari, too, reviewed policies and asked officials to work closely with the commerce ministry on whether the MSME sector could be leveraged to meet India’s import requirement.

“MSMEs can help promote economic growth and create jobs," he said on Tuesday, adding that the ministry was exploring what more could be done.

There are 63.38 million unincorporated non-farm MSMEs in the country engaged in different economic activities, including 19.66 million in manufacturing and 23 million in trade activities, according to data from the MSME ministry.

The sector employs more than 49.77 million people.

“Unless the MSME sector is given a good push, we cannot create enough jobs… The demand-supply mismatch in employment can only be taken care of by small and medium businesses, as they are growth-oriented," said Kamal Karanth, co-founder of staffing firm Xpheno Pvt. Ltd.

Unemployment among urban youth in the age group of 15-29 years, who are looking for jobs, has been consistently rising and in the October-December quarter it was 23.7%, shows the Periodic Labour Force Survey data, Mint reported on 2 June. Youth unemployment in the December quarter of 2018 was the highest in Bihar (40.9%), followed by Kerala (37%) and Odisha (35.7%), while it was the lowest in Gujarat (9.6%).

*Utpal Bhaskar and Shreya Nandi contributed to this story.

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