One of the most eye-catching announcements in the recently presented Union Budget 2024 was on job creation. The seventh budget of Finance Minister Nirmala Sitharaman has proposes allocation of Rs 2 lakh crore for five employment-focused schemes. Among these, the ambitious employment-linked incentive schemes and the internship programme have garnered significant attention. However, Sitharaman clarified that the adoption of these schemes is not mandatory; rather, they are guidelines and advisory for the private sector. She emphasised that these are not enshrined as rights, and the private sector will only be nudged to adopt them.
The three new employee-linked incentive schemes seek to enhance enrolment with the Employee Provident Fund Organisation, support first-time employees, and offer assistance to both employers and employees. The scheme is designed to fill the talent void and generate initial employment for young people. Part of the funds earmarked for the Employment Linked Incentive has already been issued to the Ministry of Labour and Employment and the Ministry of Corporate Affairs. The labour ministry has received Rs 10,000 crore for enacting other policies announced under the ELI scheme.
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Budget 2024’s internship programme
Under the programme, the government plans to provide internship opportunities to one crore young people over five years by partnering with India’s top 500 companies. Interns will receive a monthly stipend of Rs 5,000 and a one-time allowance of Rs 6,000. Companies will cover the remaining training costs through their Corporate Social Responsibility (CSR) funds. Interns will gain practical experience in their chosen field by spending at least half their time working on real-world projects. Eligibility is restricted to candidates without IIT, IIM, IISER, or CA qualifications and those without government employees in their family.
While analysts have hailed the scheme as a game-changer, similar to the PLI for manufacturing, many are sceptical about its feasibility. The success of all schemes and policies hinges on good implementation. Without enthusiasm from India Inc, the government’s plans are precarious. The scheme is expected to cost about Rs 66,000 crore, with each company having to contribute over Rs 13 crore. However, a section of the corporate sector is uncertain about the scheme’s implementation.
Rate of unemployment in India (%)
The government could be trying to incentivise lower-end job creation with these schemes, targeting sectors such as garments, leather goods, and electronics. The main issue is that skilling education so far has not been effective enough to meet the needs of many sectors.
Speaking about the scheme, FM Sitharaman reiterated that the internship programme is not compulsory. She has directed companies to optimally use their CSR funds and provide opportunities for college graduates to gain employable skills through apprenticeship programmes. Moreover, while the government will pay the promised amount, companies are required to use their CSR money to hire trainers for the interns.
Experts and industry insiders believe that if the private sector enthusiastically participates in the scheme, it will immensely benefit new entrants to the workforce. Internships at top companies significantly enhance employability by providing young professionals with invaluable real-world experience. Interns gain practical problem-solving skills, exposure to diverse work environments, and the opportunity to apply their academic knowledge in tangible ways. These experiences make them more attractive to potential employers, and employers also benefit as these interns gain a deep understanding of industry dynamics and bridge the gap between theory and practice.
For now, the industry has welcomed the initiative, but the government’s internship programme has raised several questions. Key concerns include the selection criteria for participating companies and the eligibility requirements for beneficiaries. To address these points, the government must provide more details. There is also confusion regarding the legal status of interns.
From a labour law standpoint, internships typically fall under either apprenticeship or employment, with distinct regulations and compensation structures. It is unclear what an allowance means in this context. Experts have also questioned the feasibility of the scheme’s target to hire 10 million interns over five years, suggesting that the scope should be broadened beyond just the top 500 firms. All things considered, it is a welcome step as India’s job crisis must be averted to avoid impeding the growing economy.