The central government is working on an employment-linked incentive scheme focusing on medium, small and micro enterprises (MSMEs), and discussions are said to have started between the finance ministry and the Niti Aayog on the plan's design, according to a media report.
The Federation of Indian Micro and Small & Medium Enterprises (FISME) is said to have requested Finance Minister Nirmala Sitharaman to introduce a sector-agnostic PLI scheme tailored specifically for smaller firms focusing on employment generation in the Budget 2024.
This development comes at a time when unemployment is attributed to be one of the causes of the BJP’s lower-than-expected tally in the recent general elections.
The private research firm Centre for Monitoring Indian Economy (CMIE) figures revealed that the unemployment rate rose to 9.2 per cent in June from 7 per cent in May in FY24, even though the provisional data released by the Reserve Bank of India (RBI) on July 8 showed that India increased job opportunities by 2.5 times compared to last year, the highest since 1981-82.
RBI reported on the employment scenario following a Citibank report that said a growth of close to 7 per cent would only create 8 to 9 million jobs in India, short of the 11 to 12 million needed.
"Even 7 per cent GDP growth might not be able to fulfil the job requirement over the next decade," Citi's chief India economist Samiran Chakraborty mentioned in the statement.
The media report added that MSMEs that generate most job opportunities have become a focal point for a proposed employment-linked scheme.
Data from the Udyam registration portal revealed the total employment as per registered MSMEs crossed the 20 crore mark, up by 66 per cent from 12.1 crore jobs in July last year.
It is difficult to measure jobs and, though the Employees Provident Fund Organisation (EPFO) payroll figures provide a consolidated number on formal sector employment, experts have said in the past that it fails to indicate the number of new jobs added to the economy and is merely a pointer to formalisation of existing ones.
Identifying sectors under MSMEs is another hurdle that should be covered under the proposed scheme as the government plans to focus on more labour-intensive areas. In the midst of this, the official said that further consultations within the government is required.
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