How does the UNION BUDGET 2024 tackle Youth Employment challenges in India?

India currently holds a staggering population 1.45 billion, as of 2024. Clearly, it has a demographic advantage over other countries, which is a key contributor to its position as the fifth largest economy in the world.

However, according to the CMIE, nearly 45.4% of Indian youth remain unemployed. What is the country doing to resolve this? What does the Union budget 2024, announced earlier this week, propose to do to tackle this aggravating issue?

The Finance Minister, Nirmala Sitharaman, on 23rd July announced the Union Budget of 2024, a comprehensive spending plan that laid out measures and policies to be introduced by the Indian govt to focus on key macroeconomic factors such as investment, education, and the highlight of this article- employment. The general principles that aid in the altering of employment levels are simple, with the union budget focusing on doing so in two ways:-

1. Boosting consumer demand, which would increase the demand for youth employment.

2. Incentivising job creation, which focuses on providing financial support to employers and a greater quality of skills to the youth of tomorrow.

The Budget 2024 focuses on boosting both these methods in the domestic market in the following ways:-

1.     Boosting consumer demand

Firstly, the import market of India benefits from a major cut in custom duties from 20%-15%, making consumer demand for technology such as the iPhone fall significantly. Additionally, it would make imported raw materials such as leather and marine goods become cheaper, lowering cost of production for MSMEs all over India, thereby reducing the price of finished goods such as furniture offered to the Indian consumer. As a result of lower prices, consumption in India of these goods rise, which further incentivises firms to increase production and demand more workers, tackling youth unemployment.

Secondly, the cut in income tax slab and hike in standard deduction from 50,000 to 75,000 means the average household disposable income rises significantly, saving the average consumer nearly 17,000 rupees in income taxes every year. This would incentivise higher spending on goods in the Indian economy, raising demand and urging firms to increase supply as a result.

Lastly, with a country whose people utilise gold on celebratory occasions as well as for luxury purposes, the cut on the import of gold from 6.4% to 6% will reduce gold smuggling into the country and shift the employment from an underground market to part of the domestic economy. Consumers will demand more gold during peak seasons such as Diwali, raising happiness index, saving more disposable income, and, with application of saved money, as an opportunity cost to be spent on other factors such as education and healthcare. As a result, employment in the gold sector would rise.

2. Incentivising job creation

Apart from demand-side measures to curb youth unemployment, the Budget 2024 also highlights key automatic stabilisers in the form of government schemes and capital expenditure to support employment.

The VIKSIT Bharat strategy introduced in the budget focuses on enhancing Industrial Training Institutes(ITI) and Model Skill Loan schemes to improve skills of the youth. This would aid in skill development and quality of India’s youth workforce, increasing their competitiveness and ability to secure high paying jobs.

Additionally, the government has formed a side policy in the form of 1.48 lakh crore worth of support towards education, employment, and skill development. Such measures also act as automatic stabilisers during times of economic downturn, providing a shield for the Indian economy to recover from any future fiscal stagnation.

Moreover, another major highlight of the Budget 2024 is the abolishment of the Angel Tax, a fee paid by emerging start ups in India securing funding from singular investors, also known as “Angel Investors”. This has been proven to be a major barrier to the growth of start ups in India. Abolishing this will incentivise   start up founders and the youth to begin start ups, reducing youth unemployment by urging self-employment and nudging at entrepreneurship.

A key measure introduced in the Budget 2024 is the ample amount of support in terms of finances, convenience, and security provided to MSMEs. MSMEs make up nearly 30% of India’s GDP, government promises to provide them with credit assessment schemes, loan security, and E-commerce export hubs. Such measures will provide production incentives to owners, and facilitate convenient business operations for MSMEs, encouraging more MSMEs to set up and function at high output capacities in India. Eventually, greater production and supply of MSMEs would demand higher skilled employees, thereby tackling youth unemployment and creating jobs.

In conclusion, the Budget 2024 aims to lay out a strong set of measures in order to build a foundation that tackles key macroeconomic issues persisting in India. Although strategic measures and government schemes have been laid out to effectively target domestic demand and boost job creation incentives, as the world’s fifth largest economy’s ardent efforts aim to curb the issue of youth unemployment for sustainable growth in the future.