Modi govt’s silence on job creation is raising questions

Why is the government keeping mum on employment creation linked with the infrastructure expenditure? Why did the union finance minister skip the employment generation figures in her annual budget?

Nantoo Banerjee, EOI, 23 February 2024 ; It is difficult to understand why the government is silent on job creation while it has been continuously bragging on record infrastructure spending year after year. For fresh jobseekers, opportunities are shrinking regularly. 

The constant growth of unemployment for both men and women is becoming a cause of worry. 

Currently, the country’s annual GDP expansion may be the highest among the large economies, but going by the unemployment figures periodically churned out by independent agencies it looks more like jobless economic growth. Infrastructure expenditure is directly linked with employment. 

The government had often talked about its plan to spend $1.4 trillion on infrastructure over a five-year period, from 2019 to 2023, to have a sustainable development of the country. Such an infrastructure spending should have automatically generated millions of jobs in the country. If so, why is the government keeping mum on employment creation linked with the infrastructure expenditure? Why did the union finance minister skip the employment generation figures in her annual budget? 

The finance ministry’s infrastructure policy and planning division under the department of economic affairs is directly involved in the government’s overall infrastructure spending alongside the railways, departments of transport, highways and expressways. The ministry’s prolonged silence on job creation remains a big mystery. 

According to the rating agency CRISIL, India is likely to spend nearly Rs.143 lakh crore on infrastructure in seven fiscal years through 2030, more than twice the amount ofRs.67 lakh crore spent in the previous seven financial years between 2017 and 2023. However, there is a lot of difference between infrastructure fund allocation and timely execution of projects. There appears to be something seriously wrong about the information concerning the so-called budget allocation on infrastructure projects and their implementation. 

The national budget hardly talks about the excessive delays in project implementation, which led to even dumping of several key projects and massive cost escalation for others. Official reports suggest that the cost escalation of some 809 delayed projects added up to more than Rs.4.65 lakh crore as of July, last. 

A report by the Centre for Monitoring Indian Economy (CMIE)suggested that projects worth $117 billion or Rs. 7.63 lakh crore were scrapped in FY18. It is doubtful if the annual budget allocation on the infrastructure sector provides a true picture of actual project spending or non-spending. This could be a reason behind the government’s continuous silence on the aspect of job creation. Under the circumstances, loud infrastructure budget allocation proposals may sound somewhat hollow. 

In the last full budget of 2023-24, the government’s capital investment outlay for infrastructure was increased by 33 percent to Rs.10 lakh crore ($122 billion). The government intended to spend Rs.2.40 lakh crore ($29billion) on the railway infrastructure development, claimed to be the highest ever outlay and about nine times the 2013-14 allocation. 

Some 100 critical transport infrastructure projects for last mile connectivity were identified to be taken up on priority with investment ofRS.75,000crore ($9 billion), including Rs.15,000 crore ($1.8billion) from private sources. They are intended to benefit sectors such as ports, coal, steel, fertilizer, and food grains. 

Additionally, the government planned to improve regional air connectivity by reviving 50 more airports, heliports, water aerodromes, and advanced landing grounds. 

One wished the government provided a full report on the implementation status of these projects in the 2024-25 vote-on-account budget for the knowledge of the common man and also tax payers, in particular, and their impact on employment. Unfortunately, beyond those loud capital investment projections lies the grim reality of rising unemployment. The government is unable to explain why such mega investment projections are failing to create enough jobs. 

The situation seems to be worsening with the increasing number of young men and women looking for jobs every month. The unemployment rate, according to a CMIE report, has been hovering around eight percent, up from about five percent around five years ago. The labour force participation rate has reportedly dropped to 40 percent of the 900 million Indians of legal age for employment, from46 percent six years ago. 

Going by the data compiled by the World Bank, between 2010 and 2020, the number of working women in India dropped to 19 percent from 26 percent. A CMIE estimate said that female labour force participation plummeted to nine percent by 2022. 

The labour market is passing through a crisis point. New government jobs are few. The rising demand-supply gap is being exploited by organized job touts, including ruling political party leaders at various levels. For instance, in West Bengal, central investigation agencies have unearthed big cash-for-job rackets spread all over the state. Thousands of government-funded school job aspirants, who cleared the state-level selection test, have been holding sit-in demonstrations for months as they did not get a job due to alleged recruitment scam. West Bengal, one of the country’s several regional party-ruled states, is among the most job-starved. Bihar, Odisha, Jharkhand and the eastern part of Uttar Pradesh are among the other job-starved states. A Better Place report said the number of frontline jobs in India declined by 17.5 percent in 2022-23due to macroeconomic challenges and an uncertain economic environment. Better Place is Asia’s largest human capital SaaS solution that enables enterprises to manage the entire lifecycle of their frontline workers. 

Clearly, the current unemployment situation in India does not find a link with the government’s infrastructure investment claims. As it is witnessed all over the world, infrastructure investment works like an engine for job creation. 

 The connection between infrastructure investment and job growth is crucial to harnessing the full potential of economic development. Enhanced connectivity, job creation, competitive advantage, and improved quality of life are some of the key benefits of infrastructure development. 

The government’s large infrastructure investment projection fails to tally with the performance in the areas such as job creation and quality of life of the country’s ordinary citizens. It is possible that the actual on-ground investment is far less than the budgetary fund allocation. This could probably explain why the government is silent on job creation.