As the Indian economic growth is set to decelerate in the financial year 2023-24 as per the latest estimates of all the national and international organisations, India’s job market is likely to deteriorate. Employment opportunities would decline, new job opportunities will be limited, and job losses may accelerate. Price rise and inflation will add to their woes making the prospect for the workforce in India gloomier in 2023 than it was in 2022. Politically, it would be a very challenging year for the Modi government since 2023 is the pre-election year before the General Election of 2024. Union Budget 2023-24 would be the last full budget for the ruling establishment before Lok Sabha Election 2024, and hence the last opportunity to do something for the labor force to prevent any backlash. Strengthening social security coverage to the workforce may be politically desirable at this juncture to get the required political support from them enabling the government to implement the four controversial labor codes along with big-ticket privatisation of the public sector undertakings, against which the Central Trade Unions have been agitating since 2020 and are preparing for a greater and intensive labor movement. Industrial relations in the country are also thus set to deteriorate.
Economic recovery has slowed down and economic growth has lost momentum over the summer due to a combination of erratic rainfall, which impacted sowing activities, and purchasing power is falling. Concerns over demand conditions are considerable in services and infrastructure, while consumers have become cautious regarding non-essential spending due to higher prices of food and energy. Tighter financial market conditions are weighing on the demand for capital goods which may hold back prospects of big required investment to generate new jobs in a big way. Large-scale job cuts in general and in the IT sector in particular in recent months have already tightened the country’s job market conditions, though there has been a demand for higher-skilled jobs with greater salaries. The bigger part of the workforce has been facing joblessness and unemployment which has already started rising since September 2022. As of December 16, the unemployment rate in India on a 30-day moving average is 9.3 percent according to the CMIE data. It was only 6.43 percent in September, which rose to 7.77 percent in October despite the festival season in the country, and 8 percent in November.
India has a rural employment guarantee program named MGNREGA, but there is no such program for the urban areas, where joblessness and unemployment are more acute. The Modi government has reduced the MGNREGA budget for the current fiscal by almost 25 percent and reduced it to Rs 73,000 crore at a time when demand for work in rural areas was high. Rural laborers were even discouraged not to demand work by delaying payment for them for months. The Union government owes Rs 7,655 crore to states under the scheme. Of this Rs 3,207 crore is pending for material components and Rs 4,447 crore as wages. States are already fund-starved and during recent budget consultations, states had requested the Union minister of Finance Nirmala Sitharaman not to burden them further with central schemes if the Centre does not pay its due in time.
