Govts have limited impact on jobs

Policy reforms would work better than programmes or projects

- AJAY SHAH

The Budget announcements involve numerous elements aimed at the labour market, and it is indeed a major concern in India. Some of the new announcements might disappoint over the medium term. As we know from the production-linked incentive (PLI) scheme, the Indian state is not big enough to directly impact the economy. The path to potency for policymakers lies in improving the environment in which private firms create growth and employment; it involves more of policy and less of programmes or projects.

Consider the internship programme in the top 500 companies. The government desires that this will process 10 million persons over a five-year period. On page 34, the sentence "Participation of companies is voluntary" is pitch perfect.

The government proposes a centralised online portal, numerous rules about eligibility for the applicants, and ₹60,000 per intern for a year of the Prime Minister's Internship. This will be funded out of money from the government (₹54,000) and by corporate social responsibility or CSR contributions coerced from firms in 2013.

Would many firms go down this route? Firms are rational agents and have been building internship programmes (often with payments of over 5,000 a month). The prospect of interacting with the state in centralised application portals, subsidy payments, etc would be daunting to many. It is, then, not clear how the precise number (10 million persons in five years) would materialise.