Budget 2024: New Employment Schemes Will Accelerate Workforce Formalisation, Says Neelkanth Mishra

The government on Tuesday launched five new employment schemes in the Budget 2024 in order to create more jobs. Even as they may not suffice in creating jobs, they will accelerate formalisation of work force, said Neelkanth Mishra, chief economist of Axis Bank Ltd. and head of global research, Axis Capital Ltd.

One of the employment schemes launched by Finance Minister Nirmala Sitharaman is employment-linked incentive scheme. This scheme will be based on enrolment in the EPFO. For those who are newly entering the workforce, the government will provide one-month salary. The other schemes also offer incentives to both employees and employers.

"Creation of jobs depends on how the investment cycle works. We have to create 1-1.2 crore jobs every year and I am not sure if these schemes are going to suffice," Mishra told NDTV Profit.

With these schemes, a lot of work force will enter tax bracket and this in turn will accelerate the formalisation of workforce, he said.

It will take some time for the schemes to show results, but one should expect that there could be more such intervention as government doubles down on some of these schemes to improve the labour market and employment, Mishra said.

While artificial intelligence and machine learning could be a threat to certain sect of people in the developed economy, they can help India in creating more jobs.

There is uncertainty while talking about AI's impact on jobs, but the turn in real estate market and urban construction can help absorb first generation workers that are transitioning from agriculture, he said.

The government's move to increase capital gains taxes will help move some investors away from equity and towards bonds, Mishra said. But other than that, he doesn't expect the taxation to affect the returns.