Asserting that Finance Minister Nirmala Sitharaman in her forthcoming Union Budget 2024-25 speech will have to ensure to creation of sufficient job avenues, Nirupama Soundarajan, Founder and Partner, Policy Consensus Centre said India will have to give a befitting reply to the criticism of being a slow job creator, which she said was possible by maintaining a big focus in the forthcoming Union Budget.
Speaking in Republic Business‘ pre-Budget panel discussion “Nation Wants to Grow”, Soundarajan said there was a huge potential for job creation in the manufacturing sector.
“The biggest task will be in terms of employment. There is a lot of discussion that the growth we are seeing is compounded by the kind of employment requirement we have. The biggest criticism is that we are not generating enough jobs as we need to,” said Soundarajan.
Budgetary allocations
Speaking in terms of Budgetary allocations, Soundarajan said there was a need to provide a boost to the infrastructure sector including roads, ports, and highways but added that there is no imminent change expected in the Budget. Commenting on new infrastructure, Soundarajan further added that given net-zero emissions by 2070, the country will see huge value in being a carbon-neutral nation.
” There are many of the hard-to-abate sectors such as steel, cement, and power. This is primarily because they are essential to our growth. If we don’t focus on more of a carbon-neutral kind of infrastructure now, then by 2070 you are not going to compromise on your net zero targets but you will also be compromising on your development agenda,” she added.
Highlighting what could be the major announcements in the Union Budget, especially the fiscal prudence, Soundarajan said the current inflation is not a huge matter of concern but is an aspect of what one has to constantly keep an eye on.
“As of June, the CPI was around 5 per cent, which is not a significant jump from an inflation point of view where 3 to 4 per cent is supposed to be okay. Generally speaking, I don’t think it is bad given the fact that the growth rate is also pegged for 7 per cent,” she said.
Household savings
Stating that the household savings rate has been dropping quite significantly, Soundarajan said this trend needs to change. “We have always been an economy which used to save quite a bit but that is coming down. The reason the savings rate is coming down may be necessarily not due to the fact that one is spending on essentials,” said Soundarajan, adding that there is a generation of people in the society at present who like to spend on themselves.
“The spending pattern has changed. During Covid, the basket of goods has also altered significantly,” Soundarajan added. She said during COVID-19, when sales of automobiles had reached its lowest ebb, overall consumption continued to remain upbeat.
” The basket of goods has changed because of economic conditions and a generational shift. The own-account employment segment which is huge in India can be called an employment generation but the distinction where this is an employment generation or providing them livelihood needs to be made,” she added. Soundarajan said providing mere livelihood should not be the aim of the country, adding that what starts as a livelihood has to scale up.
