Finance Secretary TV Somanathan: 'We have multiple obstacles in job creation, don't have enough skilled people'

Finance Secretary Dr TV Somanathan on Tuesday said the Centre had multiple obstacles in job creation and one of them was the skilling deficit. In an exclusive conversation with Business Today TV Managing Editor Siddharth Zarabi, the finance secretary said the industry wants people with skills, but the country does not yet have enough skilled people. "Skilling and educational system needs improvement. Let's be realistic, we have the skilling and educational system we have today, we can't wait for its improvement in the long run - it will improve. We have a new education policy and things are happening but it won't happen tomorrow."

Somanathan said the industry does need people and several industries have told the government they have a shortage of people they want to recruit. "On one hand, you have unemployment on the other you have people who want jobs. "We are seeking to bridge this with a very carefully calibrated set of policy actions," he said when asked what the Centre wants to achieve by its two key announcements in the Budget 2024. 

In the Budget 2024, Finance Minister Nirmala Sitharaman has announced a few steps such as the Employment-Linked Incentive Scheme to increase job creation - a troubling issue for the Centre.  

The finance secretary explained the new schemes, saying the Centre has made two interventions. The first one is one month's salary as a subsidy to the industry, primarily geared at overcoming the resistance to hiring first-timers.

"Employers typically like somebody with experience. Getting the first job is the most difficult because you have no experience. We are saying if you are taking somebody with no experience, we will subsidise and pay one month's wage. This helps you (industry) take a less productive person and put him through the learning curve. This is expected to incentivise more hiring of first-timers," he said, adding that every sector is eligible for this scheme. 

The second scheme is for manufacturing. "Manufacturing tends to have more specific skilling needs. And if the skilling ecosystem is not present, we are saying we will pay 72 per cent of one person year's salary as a subsidy over 4 years. Since we are paying a large subsidy, it pays for you (industry) to even skill the person...take first-timers. It is a choice we are giving."

Infrastructure

When asked whether the Centre had hit the pause button on infrastructure allocation, Somanathan said: "You cannot press the pause button when you are talking about the same year. We announced Rs 11.11 lakh crores on February 1. We are still in the same year. We retained that figure. You will see next year whether there is any increase and what it is. This year's figure, Rs 11.11 lakh crores is 17 per cent above the actuals of last year, which was Rs 9.48 lakh crore - it's a 17% increase."        

MGNREGA

After two years, the Centre has increased its allocation to the MGNREGA scheme. When asked why the Centre hiked the allocation this year, Somanathan said earlier the government was not sure about the right level at which estimation should be done.

"MGNREGA is a demand-driven scheme. There was a huge surge in demand during COVID-19. Post-Covid, what was the right level at which estimation should be done - we were not clear. we were provisioning something and then topping it up each year. Now we are clear that with revised wages this is the base level that we need."

The finance secretary, however, said that demand in MGNREGA is partly genuine and partly bogus. "We have enough studies to show that some of the demand is not necessary."