Audio podcast: Budget 2022 doesn’t address the jobs crisis adequately

Ashraf Engineer

February 5, 2022

Hello and welcome to All Indians Matter. I am Ashraf Engineer.

Can the Union Budget for 2022-23, with its focus on government spending and infrastructure, pull off a post-COVID economic recovery? Few business leaders were brave enough to say it, but the Budget presented by Finance Minister Nirmala Sitharaman on February 1, was somewhat of a damp squib. It comes in the midst of soaring prices and extremely worrisome levels of unemployment. Recently, I published a two-part series on unemployment in India and I want to focus in this episode on whether the Budget can make a difference on that front. India needs to create 100 million jobs by 2030 with roughly 10 million aspirants entering the job market every year. Instead, we’ve had rising  job losses and increasing public anger. Can this Budget deliver the jobs India needs?


India is in the midst of what many term a “two-speed” recovery – very fast growth for the richest, shrinking income and job stress for those at the bottom of the pyramid. Finance Minister Sitharaman’s response to this is a gargantuan spending plan.

But, this could mean a sharp increase in government borrowings, leading to a rise in interest rates, which in turn would hit small and medium-sized businesses seeking cheap credit to fuel their growth and create jobs in the process.

To make the plans a reality, the Budget proposes a huge 35.4% jump in capital expenditure over the previous year. This includes 25,000 km of new highways, 100 new cargo terminals and an increase in subsidies for the manufacturing of solar panels. However, there is absolutely nothing for the salaried class by way of lower income-tax rates. The middle-class needed this relief because of soaring inflation and income stress. Had income-tax rates been reduced, it would have boosted consumption and that too would have created more employment. Don’t forget, private consumption – that is, you and me buying things like clothes, electronics, home appliances, etc – accounts for an estimated 55% of the economy.

The greatest disappointment was that the finance minister did not address the unemployment crisis directly. This is – or should be – the government’s priority. In fact, so great is the crisis that it led to riots in Bihar recently.

In this situation, the Mahatma Gandhi National Rural Employment Guarantee Scheme, better known as MNREGA, should have been strengthened. Instead, the allocation for it was slashed by an incredible Rs 25,000 crore. MNREGA is the world’s largest job guarantee scheme, providing a minimum of 100 days of work every year to every rural household that demands it.

MNREGA should have got more, not less, and, in fact the expectation was that an urban equivalent of it would be announced. No such luck.

Let’s look at what happened in Bihar a few days ago. There were riots across a dozen districts as more than 1 crore aspirants signed up for 35,000 railway jobs. Aspirants said the hiring process was opaque and problematic – for instance, it allowed those with higher qualifications to compete for jobs meant for less qualified candidates. Students set trains ablaze as police fired in the air and baton-charged them. The railways suspended the hiring process, threatening to bar the aspirants from future jobs.

One angry young man told the BBC: “We are graduates, we are jobless, we are hungry. Don’t kick us in the stomach.” He told the BBC that he was the son of a farmer who sold his land to get him educated. His mother refrains from buying medicines when she is ill so that they can pay for his rent and tuition. He criticised Prime Minister Narendra Modi’s remark that opening a pakoda stall also counted as a job. “Why are you asking graduates to fry pakodas?” the young man asked.

India is facing an acute job crisis and the Budget should have addressed that head-on. Instead, it skirted the issue.

Unemployment stood at nearly 8% in December 2021 after clocking more than 7% in 2020 and for most of 2021. This situation is unprecedented, or has been for at least four decades.

Also, the more educated you are, the less likely you are to find a job. This means that the quality of jobs available is receding too. Meanwhile, the proportion of women aged 15 or older in the workforce is among the lowest in the world.

India is simply not producing enough jobs. So, naturally, there is a scramble for government jobs – such as the 35,000 I mentioned at the railways.

Which brings me back to MNREGA. Dependence on jobs offered through the scheme soared during the pandemic but allocation for it fell to Rs 73,000 crore against the revised estimate of Rs 98,000 crore for 2021-22.

In December 2018, 1.9 crore households demanded work under MNREGA. In December 2019, that dipped slightly to 1.7 crore but by December 2020 – during the first year of the pandemic – there was a massive increase to 2.7 crore households demanding jobs. The demand did not reduce substantially even after the unlock, indicating that the economic recovery is not what it’s made out to be. Demand stayed above pre-pandemic levels in December 2021, with 2.4 crore households asking for work.

The Union Budget is the primary indicator, not just of the state of the economy but also the government’s intent. So, what do we make of this Budget? If generating employment is the top concern, then it should have done more on that front. As of now, it has not addressed it well enough and has, in fact, stepped back on the crucial employment safety net of MNREGA. It can, of course, be argued that the infrastructure push will generate jobs but, like I explained earlier, it may not be enough and may even result in fewer jobs in the crucial small and medium-sized businesses space.

The finance minister also said that the Production-Linked Incentive scheme, which ties government incentives to manufacturing performance, will generate 6 million jobs in five years. As I’ve said earlier, we need to create 10 million jobs per year, so this number isn’t even making a dent.

The recent All Indians Matter series on employment distress had asked: “Where are the jobs?” Budget 2022 certainly doesn’t seem to answer that question.

Thank you all for listening. Please visit for more columns and audio podcasts. You can follow me on Twitter at @AshrafEngineer and @AllIndiansCount. Search for the All Indians Matter page on Facebook. On Instagram, the handle is @AllIndiansMatter. Email me at Catch you again soon.