Budget 'nudges' in the right directions

But much bolder and comprehensive reforms are needed

- AJAY CHHIBBER

Modi 3.0's first post-election Budget has tried to acknowledge the messages that the voters sent. Its focus on employment and skilling, rural distress, and small and medium enterprises, as well as the need to address factor-market distortions in labour and land, suggests this. It has maintained the priority on infrastructure that was the hallmark of budgets in Modi 2.0. And it does all this with further fiscal consolidation. These are all changes in the right direction. But will the multiple proposals and schemes announced be enough? My take is that much bolder and comprehensive reforms are needed.

The "nudge," as Finance Minister Nirmala Sitharaman calls the employment incentive scheme proposed in the Budget to encourage firms to hire more labour, will, by itself, not make a big dent in unemployment. It allows firms to use 10 per cent of their corporate social responsibility funds - which could encourage its uptake. The increase in expenditure on skilling is also welcome. But what will create jobs on the scale India needs is more private investment in labour-intensive manufacturing sectors, not employment subsidies. Jobs will also come from massive increases in tourismrelated services, which should get more attention. But recognising the issue of unemployment, instead of trying to underplay it, as was the case in the runup to the election, shows that the government understands the problem.