 "Budget 2025-26: Industry expects steps for labour-intensive industries")
Employment and skilling are expected to get continued focus in the Budget for Financial Year 2025-26 (FY26) while measures for private investment and labour-intensive sectors ensure India’s economic growth.
Job creation was the big theme in the National Democratic Alliance government’s first full Budget in July 2024 after national elections, announcing direct interventions such as Employment Linked Incentive Scheme and the Prime Minister Internship Scheme to tackle the issue of job creation. The employment scheme is yet to be launched and the internship programme started as a pilot project in FY25.
Industry expects the Budget to make announcements regarding the two schemes and their road ahead. While the government builds on existing schemes, the Finance Ministry’s pre-budget consultations received representations from industrialists and economists to improve skilling initiatives. Their suggestions included setting up more universities in districts and integrated townships for micro, small and medium enterprises (MSMEs).
Various quarters have suggested a production-linked incentive scheme for labour-intensive industries, especially for MSMEs.
The Confederation of Indian Industry (CII) has sought targeted support for employment-intensive sectors such as construction, tourism, textiles and low-skilled manufacturing.
Finance Minister Nirmala Sitharaman has said India has a window of 30 years for demographic dividend that comes along with the advantage of the lowest dependency ratio. With a median age of 29 years, India is a young country that will add 133 million people to its working-age population by 2050.
Also Read
“Coupled with higher employment, India also needs to ensure that productivity goes up. India’s Incremental Capital Output Ratio (ICOR) needs to trend down from its present level of 4.1. We need to establish metrics of measuring this. In fact, the Union Budget could set up an expert committee to study this in greater detail and recommend the way forward,” said Chandrajit Banerjee, director general, CII.
According to experts, strategic investments and public spending can drive growth in multiple sectors, generating immediate jobs while also laying the foundation for long-term economic progress.
“India’s young population offers immense potential for economic growth. To tap into this advantage, the government is likely to emphasize skill-building and employment generation. Initiatives such as expanding vocational training, promoting entrepreneurship, and offering incentives to businesses to hire young professionals could significantly boost job creation, income levels, and consumption,” said Bhavna R Tiwari, executive vice-president & head of human resources, UTI AMC.