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Budget 2013 is pragmatic and growth oriented, and has been structured to increase the growth rate of sectors like infrastructure, power, agriculture and manufacturing. This is in line with our expectations and we expect the budget reforms to have a positive impact on the unemployment rate.
India has an inflow of 1.3 crore people joining the workforce annually and the incentivised approach of the National Skill Development Corporation to make people employable is a welcome move. The 29.4 per cent hike in the planned spending sends a good signal.India has the second youngest population in the world and with 85 per cent of the Indian workforce employed in the informal sector. Hence, the proposal to increase allocation to the HRD ministry by 17 per cent, the allocation of Rs 1000 crore to extend skills of youth, and the allocation of Rs 27,258 crore to Sarva Shiksha Abhiyan to implement the Right to Education Act and secondary education are commendable.
Given the talent crunch in the country, these moves will help skills development for the manufacturing sector that will drive the economy. But at the same time more needs to be done to build skills. Also, there has been silence on labour reforms. There has been no significant benefit to the large working middle-class. The expectations were high on better tax benefits, but no change has been made here.
There has been an impetus to grow the manufacturing sector by addressing growth versus tax concerns by providing a three-year extension of tax benefits and better access to credit. This will benefit mainly the medium and small enterprises, and will impact job creation as they employ around 40 to 50 per cent of the unorganised workforce. We can expect industries like manufacturing, mining, energy, infrastructure, insurance, healthcare and education to be the leading job creators. We would have liked to see some impetus for other major job-creating services sectors like IT, telecom and hospitality.
The Finance Minister has indicated friendliness towards FIIs and FDIs through simpler KYC norms; this will motivate external investors and help growth.
(The author writes a fortnightly column for Cambuzz called World of Work . He is MD & CEO, Randstad India.)
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