Budget budget: PLI-type scheme needed to create jobs, says CII President TV Narendran


Before Covid hit, the unemployment rate was 6.3% in 2018-19 and 4.7% in 2017-18.

The government should introduce a program, in line with the Production Incentive Scheme (PLI), to directly boost job creation, which will ultimately increase revenue levels at the grassroots level and maintain growth momentum, CII TV President Narendran FE said. in an interview.

Any such program, he said, should link incentives to job creation and target sectors that work intensively on employment such as textiles and clothing, gems and jewelry, engineering goods, among others.

“This will complement PLI schemes, which typically link incentives to investment and production, although they indirectly encourage job creation.

The pandemic has exacerbated unemployment. According to CMIE, the unemployment rate rose to 7.9% in December from 7% in the previous month.

Before Covid hit, the unemployment rate was 6.3% in 2018-19 and 4.7% in 2017-18.

In order to mitigate the impact of the influx of inputs on small and medium-sized enterprises, which are more susceptible to inflation shocks than large corporations, Narendran suggested that the government enter into index-based contracts with such entities instead of those with fixed prices.

In the private sector, too, there are such index-based contracts, especially with carriers; therefore, when the price of fuel rises, the index rises and vice versa. Such a mechanism will protect the interests of both sides from fluctuations in input prices caused by global factors.

Procurement of goods and services by various ministries / departments and public sector units from small enterprises amounted to as much as Rs 39,538 million in the 21st fiscal year.

Elaborating his wish list for the upcoming budget for 2022-23, Narendran said the government must continue to bear the brunt of announcing a good investment cycle, although long-elusive private capital has been strengthening lately, especially in sectors such as steel and chemicals. For example, there could be an investment of about 1 lakh crore in steel in the next 3-4 years, Narendran, also CEO Tata Steel, he said.

Large-scale investment in infrastructure and the creation of permanent assets remains key to the country’s economic recovery after the pandemic, he stressed. Gross fixed capital formation rose 11% in the September quarter, on a favorable basis (up -8.6% a year earlier).

However, private consumption, the mainstay of the economy, remains fragile, especially in the middle- and low-income strata, although it continued to grow in the first half of this fiscal period.

“The budget for fiscal year 23, therefore, must continue to support spending through higher expenditures for programs such as the National Guarantee Scheme for Rural Employment,” he said. Private consumption grew by 19.3% in the June quarter and 8.6% in the September quarter, supported by the contracted base.

The pandemic-induced job insecurity and fears of likely increases in health spending due to new situations with Covid have led people to delay discretionary spending.

“The household balance is fragile. That is the part that needs to be handled a little more carefully to ensure a speedy recovery, ”he added.
The forthcoming budget should also focus on further strengthening health infrastructure. This will not only enable the authorities to effectively curb the spread of Covid, but will also increase people’s confidence and could ultimately help raise private consumption.

Similarly, the budget must strengthen the focus on quality education and skills – two prerequisites for meaningful employment.
Narendran acknowledged that the evolving situation with Covid poses some negative risks, but added that overall feelings were very optimistic.

“By the first week of December (before the latest increase in Covid cases), the mood was positive; we saw that demand was quite strong and that most sectors were at pre-pandemic levels and most companies were exporting more. Capacity utilization for most of our (CII) members was as high as 70-80% and people were planning investments. Of course, there were risks due to the new situation with Covid “, he added.

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