Event Report
Sana Ansari
The IMPRI Center for Work and Welfare (CWW) at the IMPRI Impact and Policy Research Institute, New Delhi, organized a thematic discussion on Employment, Livelihoods, and Union Budget 2025-26 as part of its 6th Annual Series of Thematic Deliberations and Analysis of the Union Budget 2025-26 which was held on February 3.
The discussion commenced with Purvi Narayan, a researcher at IMPRI, who introduced the chair of the program, Prof. Suchita Krishnaprasad—Visiting Professor at IMPRI and former Associate Professor and Head of the Department of Economics at Elphinstone College, Mumbai.
She then introduced the distinguished panel of experts, which included:
- Mr. Sandeep Chachra, Executive Director, ActionAid Association, India, Ex Co-Chair, World Urban Campaign, UN-HABITAT, and Advisor, IMPRI.
- Prof. Sarthi Acharya, Professor (Delhi Chair) at the Institute for Human Development, New Delhi, and Former Director, Institute of Development Studies (IDS), Jaipur.
- Prof. S. Irudaya Rajan, Chair, International Institute for Migration and Development, India.
- Prof. Swarna Sadasivam Vepa, Independent Researcher and Teaching Consultant; Visiting Professor at the Madras School of Economics and IMPRI.
- Mr. Udit Misra, Writer for the Explained page, The Indian Express.
- Dr. Partha Pratim Sahu, Associate Professor at the Centre for Entrepreneurship Development and Financial Inclusion & Head (i/c) of the Centre for Good Governance & Policy Analysis, National Institute of Rural Development and Panchayati Raj (NIRD&PR).
- Ms. Amarjeet Kaur, General Secretary, All India Trade Union Congress.
Following the introductions, Team IMPRI delivered a presentation on key budgetary insights, led by Ms. Sana Ansari.
Opening Remarks by Prof Suchita Krishnaprasad
Prof Suchita Krishnaprasad began the discussion by highlighting the key themes of this year’s budget. She noted that the budget started with ambitious goals such as eradicating poverty, ensuring 100% access to quality education, providing affordable healthcare, and creating a skilled workforce with meaningful employment. Another key goal is increasing women’s participation in economic activities to 70%.
These objectives align with the four focus groups identified in the budget—Garib (poor), Yuva (youth), Nari (women), and Annadata (farmers). She emphasized that these groups are central to policymaking as their livelihoods are crucial for economic growth.
Prof Krishnaprasad also pointed out that the budget highlights three key engines of growth—Agriculture, MSMEs, and Investment. However, she cautioned that the current global situation may not be favorable for achieving these goals. Wars have drained significant resources and contributed to the worsening climate crisis. Amidst this instability, there have also been announcements of higher tariffs, raising concerns about trade tensions.
She mentioned that the Economic Survey acknowledges these challenges. As global trade wars loom, new difficulties may arise, many of which extend beyond the scope of an annual budget. However, she stressed that it is important to examine how this budget—introduced after the ruling party’s third consecutive victory—addresses issues that impact the livelihoods of a large section of the population.
Prof Sarthi Acharya began his presentation by highlighting the key features of the budget, particularly its focus on district-level targeting in agriculture across 100 districts. He emphasized the significance of pulses, high-yield variety seeds, vegetables, fruits, and fisheries, along with the increased allocation under the Kisan Credit Yojana.
He pointed out that transitioning agricultural districts takes time, typically around five years, as it requires establishing an administrative system, engaging with farmers, and preparing land for new crops like pulses. The shift from non-pulse to pulse crops alone takes nearly two years due to land preparation requirements. While this initiative is promising, it is a long-term venture that must be complemented by broader policies on industries, energy, and research & development. He emphasized that a single year’s budget should not be expected to address all economic challenges but should align with monetary policy and long-term economic strategies.
Discussing industrial development, Prof Acharya noted that while India has the potential to generate employment in sectors like electronics, the current focus is primarily on assembly, with inadequate backward linkages. He highlighted similar issues in the leather, toy, and garment industries, where India’s small-scale production contrasts sharply with large-scale factories in countries like Italy, China, Bangladesh, and Cambodia. He stressed the need to develop large-scale production capacities, modern technologies, and branding strategies to compete globally.
Prof Acharya observed that India’s exports are largely raw materials rather than finished products. To enhance exports, reducing bureaucratic red tape and lowering taxes are necessary. However, he cautioned that unless domestic industries develop and become competitive—a process that takes three to five years—there will be limited immediate impact on employment.
He underscored the need for a stronger human capital strategy, particularly in AI, IITs, and medical education. While increasing seats in these fields is important, he questioned whether India’s school system is adequately preparing students for such advanced education. He pointed to reports indicating that a significant percentage of municipal school students struggle with basic reading skills, which creates a weak foundation for higher education. If these systemic issues persist, elite institutions will continue to produce graduates, many of whom may migrate abroad, benefiting international companies rather than India’s economy.
He also criticized India’s tendency toward reactive and ad hoc policy decisions in research and development. He noted that in the past, India attempted to develop superconductivity and electronics industries following international trends, but these initiatives failed due to a lack of long-term planning. Countries like China and South Korea, on the other hand, have focused on original product development rather than imitation, leading to global success in industries like electronics and display technology. Prof Acharya noted that nuclear energy development is a long-term investment, typically taking up to ten years. While nuclear plants provide employment opportunities, their contribution in the short term is limited.
He concluded that, in the immediate future, only schemes like the e-Shram portal for gig workers and certain direct employment programs would have a meaningful impact. Most other initiatives in the budget are long-term propositions requiring sustained policy support. On employment trends, he pointed out that labor force participation has risen mainly due to women taking up unpaid work, while industrial employment remains stagnant. Agriculture, despite contributing only 16-17% to GDP, remains the largest employer due to slow expansion in other sectors.
Regarding policy recommendations, he stressed the need for state and central government coordination, particularly in education, advocating for 6% budget allocation as per the Kothari Commission. He also cautioned about cost-push inflation driven by India’s reliance on imports, making price stability a challenge.
Prof Acharya concluded that while some initiatives like the e-Shram portal may have short-term impact, most budget measures require sustained, long-term efforts to yield significant results.
Migration and Displacement: Insights
Prof S. Irudaya Rajan elaborated on the importance of migration as a livelihood strategy for the rural poor in India. He began by addressing the impact of the COVID-19 pandemic, which led to millions of urban migrants, especially those from smart cities, returning to their rural hometowns. This phenomenon, referred to as “reverse migration,” raised critical questions about whether rural areas could provide sufficient opportunities to retain these returning migrants. Prof Rajan highlighted the fact that many of these individuals eventually returned to cities due to a lack of adequate employment opportunities in rural areas, underlining a key challenge in rural development.
He pointed out that India’s agricultural sector is struggling with growth below four percent, which makes it difficult to rely solely on agriculture for rural livelihoods. While allied activities such as livestock farming, fisheries, and dairy production have shown slightly better growth, this sector still does not create enough employment or income opportunities for the rural population. Prof Rajan also highlighted the challenges in urban areas, where the service sector—traditionally a significant source of informal employment—is in decline. Additionally, while the manufacturing sector has seen some growth, it faces numerous challenges in terms of job creation and stability.
This situation has led to a pattern of continuous circular migration, where individuals move back and forth between rural and urban areas. Prof Rajan emphasized that this is not merely seasonal migration but rather a more complex, ongoing movement of people seeking better economic opportunities. Many migrants work in cities for lower wages, unable to earn enough to support a decent standard of living. This creates a cycle of migration without offering sustainable livelihood solutions.
Prof Rajan argued that the focus of policy should shift from distress migration—where people are forced to migrate due to a lack of opportunities—to aspirational migration. In an ideal scenario, migration would be a choice driven by the desire for better job prospects, higher wages, and improved quality of life.
Migrants would send money back home, children would attend school, and families would be able to break the cycle of poverty. However, he noted that climate change is exacerbating migration patterns, with rural populations, particularly in coastal areas, being displaced by environmental factors. This has compounded the challenges faced by the rural poor, making it even more critical to develop climate-resilient agricultural practices and rural employment opportunities that can withstand these shifts.
In his speech, Prof Rajan also addressed the issue of wages. He pointed out that many workers, especially in rural areas, are not earning enough to sustain themselves or their families. He advocated for a shift from minimum wages to “living wages,” which would allow workers to meet their basic needs and live with dignity. This is especially important as many rural migrants who return to their villages often do not have access to enough work opportunities that pay adequately.
Furthermore, Prof Rajan emphasized India’s demographic dividend—its large, youthful population—and the potential it has to supply skilled workers both domestically and internationally. However, he argued that India is not fully prepared to harness this potential. Despite having a Ministry of Skill Development, India is struggling to provide adequate skills training for its population. Many Indian migrants, even those with higher degrees, experience deskilling when they migrate abroad. This is especially true for students who study in countries like Canada, Australia, and the UK, where their qualifications may not be fully recognized or utilized.
Prof Rajan noted that if India is to position itself as a global hub for skilled labor, it must focus on equipping its citizens with the right skills that meet the demands of the global job market.
Lastly, Prof Rajan pointed out the urgent need for comprehensive migration policies in India. While there were some discussions about a national migration policy during the COVID-19 crisis, there has been little progress in implementing a structured approach to migration.
He emphasized the importance of developing both internal and international migration policies to ensure fair and sustainable opportunities for migrants. He also warned against policies that restrict migration, such as those that reserve jobs exclusively for local populations. Prof Rajan argued that such policies would limit the mobility of labor and hinder economic growth. Instead, he called for an open debate on migration policies to ensure that all citizens, regardless of their origin, have access to decent jobs and livelihoods.
Economic Survey and Budget Analysis: A Critical Perspective
Mr Sandeep Chachra began the session by reflecting on the state of the nation as portrayed by the economic survey. Despite the survey’s optimistic tone, he expected a more populist budget. By “populist,” he referred to policies that address the working classes of India, not just the middle class. He highlighted the importance of focusing on the working people and the realities of their conditions.
Mr Chachra emphasized the significance of the Periodic Labor Force Survey data. This data paints a clearer picture of the employment situation and real wages in India. While nominal wages may have risen, real wages, particularly for women and in self-employment, have shrunk considerably. Women’s wages in self-employment dropped by more than 20% since 2017, from Rs 4,348 to Rs 2,950 per month. Men’s wages have also fallen, though daily wages for both genders have seen a slight increase. However, these wages remain precarious, with women earning just Rs 159 per day and men earning Rs 242.
Mr Chachra also addressed the growing gender wage gap. Despite the overall shrinking of wages, the gap between men’s and women’s wages has widened, making the dream of equal wages for women seem distant. He pointed out that the rise in female labor force participation—from 23.3% in 2017-18 to over 41%—has been driven by women taking up low-paying, precarious jobs. Many women are now working in agriculture, a sector that is not growing, or in unpaid roles.
Mr Chachra raised concerns about consumption data, pointing out that while consumption has seen small increases, the levels remain low. Rural households average just Rs 4,000 per month, and urban households, Rs 6,000. He also criticized the government’s promise to create 80 lakh jobs annually, noting that this target is not being met, and the employment data reflects a rise in precarious work rather than stable jobs.
The focus on capital expenditure (CapEx) in the budget was also discussed. While the government claims that CapEx investments will create jobs and stimulate the economy, Mr Chachra pointed out that last year’s CapEx allocation was not fully spent. This year, CapEx allocation has been reduced by Rs 1 lakh crore, which will likely be redirected for tax relief. He questioned whether tax relief will lead to meaningful consumption and economic growth or just contribute to paying off debts.
Mr Chachra also critiqued the manufacturing sector and the lack of investment in labor-intensive industries. He suggested that the government should have focused on rural industrialization and cooperatives to create sustainable livelihoods and protect labor rights. Unfortunately, the budget did not allocate increased funds for these areas. While there is some focus on gig workers and the need for social security, the overall support for the labor sector remains inadequate.
In conclusion, Mr Chachra expressed disappointment with the budget, stating that it fails to meet the expectations of the Indian workers, women, and marginalized communities. He believes that the direction set by the budget does not promise secure progress toward welfare and inclusion. The budget’s provisions seem insufficient in addressing the real needs of India’s working class, and it lacks the imagination necessary for significant and lasting change.
Budget Favours Elections Over Economic Revival: Critique
Ms Amarjeet Kaur began her speech by quoting the Finance Minister’s statement, “A country is not just its soil; a country is its people.” However, she expressed concern that the recent budget seems to overlook the needs of the people, especially in a time when the Indian economy is facing significant challenges. According to her, the budget is designed with an eye on upcoming elections rather than addressing the current economic downturn.
She emphasized that the country’s economy is in dire straits, with a lack of decent job opportunities and a crisis in various sectors, particularly in the social sector. Ms. Kaur pointed out that the working class is being targeted through labor code reforms that have not taken trade unions into consideration, further exacerbating the situation. The budget, she argued, appears more focused on garnering votes rather than resolving India’s deep-rooted economic issues.
She criticized the budget’s failure to address critical issues such as employment, minimum wages, and the informal sector. While there was an expectation of an urban employment guarantee scheme similar to the rural one, the budget failed to meet this need. The real wages of workers, according to Ms. Kaur, have been eroded by inflation, and the budget does not take this into account. Furthermore, Ms Kaur pointed out that the 93% of India’s workforce employed in the informal economy remains largely ignored.
She also noted the budget’s failure to provide relief to marginalized workers, particularly those in agriculture and the MSME sector. Despite claims of support for these sectors, the budget does not adequately address the ongoing distress in agriculture or the needs of small businesses. She further criticized the increasing push for privatization, such as 100% FDI in the insurance sector, which could harm the interests of workers and the general public who depend on these services.
Ms Kaur highlighted that migrant workers, who make up a significant portion of the informal workforce, have been forgotten once again. While the government had promised a migration policy, it instead incorporated migrant issues into the Occupational Safety and Health Code, which only benefits employers and ignores workers’ rights. She criticized the government’s approach to migrant labor, which has consistently failed to address their grievances.
In conclusion, Ms Kaur argued that the budget has done little to uplift India’s economy or address the challenges faced by its vast majority of workers. She emphasized that the focus should be on inclusive growth, with a proper focus on social sector spending, workers’ rights, and employment generation, rather than political gains.
India’s Economic Growth and the Challenges of Jobless Recovery: Navigating the New Normal
Prof Swarna Sadasivam Vepa began by addressing the current macroeconomic scenario in India, which, despite its impressive growth rates, presents a rather paradoxical situation. She highlighted how India’s GDP growth rate, which has been touted as the highest in the world at 6.2%, along with a relatively low inflation rate of 4.7%, paints a picture of an economy that is performing well. Furthermore, she pointed out the narrowing fiscal deficit and India’s rise to the fourth position globally in terms of GDP, which adds to the optimistic view of the country’s economic trajectory.
There is also the overarching narrative, propagated by institutions like the IMF, that India is solidifying its economic fundamentals and on the path to becoming a “Vish Guru,” or perhaps a superpower, with aspirations of achieving developed nation status by 2047.
Prof Vepa acknowledged these encouraging signs, including the slowing population growth and the assumption of rising wages due to labor shortages in peak-season agricultural manual work. However, she raised an important question: despite these positive indicators, why is there growing concern about India’s economic future? She explained that while the overall macroeconomic indicators might seem rosy, the reality on the ground tells a different story. This disconnect, she argues, is primarily due to the emerging “new normal” that the global economy is facing—an environment of widespread job losses, recessionary pressures, and numerous challenges related to trade and technology acquisition. India must navigate these complex issues while striving for development.
Prof Vepa emphasized that although India has witnessed jobless growth, the government’s focus on capital expenditure (capex), primarily through infrastructure development, was expected to spur economic growth and job creation. Unfortunately, this has not been the case. She explained that the impact of infrastructure projects on growth and employment is a long-term process, and in the short term, these initiatives have been yielding lower returns than anticipated. The capital output ratio, a key indicator of investment returns, has worsened, meaning the returns on capital investments have not generated the desired outcomes.
The discussion then shifted to a critical issue: rising unemployment. Prof Vepa noted that India’s unemployment rates, while seemingly low (3.2% in rural areas and 4.9% in urban areas), are misleading. She pointed out that the official statistics do not reflect the true nature of unemployment in the country, particularly the long-term joblessness that is not captured in current measures. Additionally, she discussed how the status of being employed in India is defined loosely—someone working for only a few days a year can still be counted as employed, which distorts the true extent of the problem.
Prof Vepa also delved into the issue of declining real wages, both in urban and rural areas, despite nominal wage increases. She explained how inflation, even at a relatively low rate of around 6.18% compounded annually, erodes the real value of wages over time, leaving people with reduced purchasing power. This decline in wages is compounded by the distress in the informal economy, where a large portion of India’s labor force is employed. The absorption capacity of the informal sector has diminished over time, and even though India has consistently touted low inflation and a relatively stable economy, these benefits have not trickled down to the working population.
In particular, Prof Vepa focused on the state of agriculture, which, despite being touted as a potential driver of economic growth, has faced stagnation due to a lack of investment and poor support for farmers. She criticized the government’s focus on handing out subsidies and freebies, which, according to her, only serve to mitigate losses without addressing the core issues. The cost of production in agriculture has soared, with the cost of producing a hectare of rice or wheat far exceeding the amount of assistance provided to farmers. These economic challenges in agriculture are exacerbated by the absence of sufficient investment in research and development and the waning role of extension services that once helped farmers improve yields.
The challenges facing the non-farm sector, especially in the MSME (Micro, Small, and Medium Enterprises) sector, were also discussed in depth. Prof Vepa noted that while the micro and small sectors are prevalent, they are largely incapable of generating significant employment opportunities. It is the medium enterprises that hold the potential for real job creation, but unfortunately, they represent a very small portion of the MSME sector. As a result, the absorption of labor in this sector has been limited, contributing to the overall stagnation in employment.
In conclusion, Prof Vepa urged for a deeper examination of India’s macroeconomic indicators, pointing out that while the nation may seem to be on an upward trajectory in terms of GDP growth and inflation control, underlying issues such as jobless growth, declining wages, and the shrinking capacity of key sectors to absorb labor must not be overlooked. These challenges require more than surface-level policy interventions; they demand a comprehensive and sustained effort to address the root causes of economic distress, particularly in the informal and agricultural sectors.
Employment and Livelihood Perspectives
Dr Partha Pratim Sahu emphasized that while assessing the budget’s impact on employment and livelihood, a short-term perspective is not sufficient. He suggested that it is important to look at budgets from the last few years to make a more comprehensive evaluation. Employment generation and livelihood improvement cannot be assessed in isolation but need to be understood in a broader context, considering past budget announcements and their outcomes. Dr. Sahu highlighted the concerns of marginalized people, particularly in rural areas, who are directly or indirectly affected by the budget but often have no understanding of how these changes impact them.
He pointed out that while every budget promises to boost employment and improve livelihoods, the question remains whether these promises are truly fulfilled. Since 1991, the country has been grappling with the issue of “jobless growth” where production has become more capital-intensive, limiting job creation. Dr Sahu emphasized that true employment is not just about quantity but also about the sustainability and quality of jobs, especially in rural areas. There is still a significant portion of the workforce engaged in informal labor markets with low wages and limited security. Therefore, the government’s efforts must not only focus on creating jobs but also on creating quality, sustainable employment opportunities.
In terms of specific programs, Dr Sahu mentioned the government’s increasing focus on entrepreneurship and skill development. Numerous initiatives, including startup programs and skill-building schemes, have been launched by both central and state governments. However, he noted that creating successful entrepreneurs is not an easy task. It requires a robust ecosystem, a supportive environment, and long-term efforts. He also emphasized the need to shift from a supply-driven approach to a more targeted, needs-based approach for skill development and entrepreneurship.
Dr Sahu further discussed the challenges faced by small-scale entrepreneurs, particularly those in rural areas, who often lack access to support systems like incubation, marketing, and finance. He stressed that while programs such as self-help groups and skill development initiatives are promising, their effectiveness lies in how well they address the real challenges faced by these entrepreneurs. For example, small farmers and entrepreneurs often struggle with marketing and lack proper incubation support, which affects their growth and sustainability.
Regarding the rural workforce, Dr Sahu highlighted the pressing need for more targeted schemes to improve livelihoods in rural areas. He pointed out that India’s rural population has a significant proportion of young people, especially in the age group of 14-29 years, who need job opportunities, vocational education, and entrepreneurial training to fulfill their aspirations. This demographic shift, he noted, must be considered while planning future policies and budgetary allocations.
Dr Sahu concluded by stressing the importance of transforming the current approach to employment and livelihood creation into a more sustainable and scalable one. He suggested that future budgets should focus on the relevance, scale, and sustainability of the employment opportunities being created. He also called for better data collection and evidence-based policy-making to improve the effectiveness of various schemes and ensure that they reach their intended beneficiaries.
Skilling, AI, and Economic Priorities: A Critical Analysis of India’s Workforce Challenges and Budget Allocations
Mr Udit Misra elaborated on the challenges India faces in skilling its workforce, especially in the context of AI advancements and their potential to disrupt the labor market. He referenced the Economic Survey’s data, highlighting India’s demographic advantage: it is the world’s most populous country and one of the youngest, with 26% of the population aged between 10 to 24 years. This demographic presents a significant opportunity, but only if the growing workforce can be integrated into meaningful, productive jobs.
He pointed out that 60% of India’s workforce is still engaged in agriculture, which signifies a substantial mismatch between the country’s potential and the sectors driving its economy. Wages, both for salaried and self-employed workers, have stagnated, falling below 2017-2018 levels, reflecting a deeper issue of underemployment and inadequate skill levels in the workforce. Over 88% of India’s workforce is engaged in low-competency occupations, as per the Periodic Labour Force Survey (PLFS), a statistic that underscores the challenge.
The Economic Survey also noted a significant gap in educational qualifications and employment alignment, with 53% of graduates and 36% of postgraduates underemployed in roles that don’t match their qualifications. This mismatch exacerbates India’s employment challenges, especially in the context of AI and technological disruption.
In the context of the budget, Mr Misra observed that while skill development was mentioned multiple times, the actual financial commitment to addressing this issue seems insufficient. For example, while the budget allocated ₹500 crore for a Center of Excellence in AI, which translates to approximately $58 million, this is a fraction of what other countries are investing in similar initiatives. In comparison, India’s total expenditure on skill development remains disproportionately low—only ₹3,000 crore in the current fiscal year, rising to ₹6,000 crore in the next. Despite the government’s recognition of skill development as a critical priority, it ranks 86th out of 123 government priorities, highlighting the mismatch between policy focus and actual spending.
Mr Misra also pointed out the stark contrast between the government’s talk of skill development and the actual resources allocated. He referenced schemes like the “Skill Acquisition and Knowledge Awareness for Livelihood Promotion,” which, despite being introduced with fanfare, had its budget slashed in subsequent years, going from ₹244 crore in FY 2024 to zero in FY 2025. This inconsistency in funding reflects a deeper problem: India has long recognized the importance of skills but has failed to commit the necessary resources to genuinely address the employability crisis.
In conclusion, Mr Misra emphasized that India’s problem is not just one of employment but of employability. Even if more people are employed, many are underpaid and under-skilled for the demands of the market. He argued that the real challenge lies in ensuring that India’s workforce is adequately trained to meet the evolving needs of both domestic and global markets, especially as AI and automation continue to shape the future of work.
The event concluded with an engaging second-round discussion and a Q&A session with experts, providing valuable insights into the budget’s impact on employment and livelihoods.
Acknowledgement: Written by Sana Ansari, Research Intern at IMPRI.
