The new budget could prioritise job growth in rural sectors through incentives for manufacturing industries

Experts: Budget likely to boost rural employment through manufacturing expansion

As India approaches its first budget under the re-elected Modi government, the fiscal plan is expected to focus on creating new job opportunities, especially in rural areas. Promoting labor-intensive manufacturing industries and strengthening rural infrastructure could help address unemployment, according to analysts at Goldman Sachs.

In its pre-budget analysis, the key financial services sector envisages key incentives and policies aimed at creating jobs in rural areas. Labour-intensive sectors such as clothing, textiles and toy manufacturing could receive production-linked incentives to boost employment. Commercial aircraft assembly is another area that experts say could generate significant new jobs. Addressing the needs of the agricultural sector is also on the agenda, with measures projected to boost domestic food production and combat high food inflation through development of agricultural infrastructure.

With the economy rebounding to an estimated 7.2% growth in the current fiscal year, job creation continues to lag behind demand. As per estimates, annual employment generation needs to increase to 11-12 million to absorb new entrants, which requires continued policy stimulus. The upcoming budget, therefore, envisages an expansion of ongoing support programmes with clear targets for rural employment and growth in credit to SMEs.

Overall, the analysis suggests that the upcoming budget will maintain its fiscal deficit target while emphasizing long-term priorities such as job creation. Measures to expand skills development and services exports are also expected. Given the numerous signals that combating unemployment will remain a primary objective, a rural focus of the budget could play a decisive role in restarting the labor market after the pandemic.