- Tuesday, March 04, 2025
The International Labour Organization estimates that 29 per cent of India’s young university graduates were unemployed in 2022
By: Shajil Kumar
THE INDIAN government will spend $24 billion (£18.58bn) on employment and training, it said Tuesday, as Prime Minister Narendra Modi looks to address uneven economic growth and mollify disgruntled voters after a surprising election setback last month.
The funding will be used over five years for a package of five schemes and initiatives to “facilitate employment, skilling and other opportunities” for more than 40 million young people, finance minister Nirmala Sitharaman said in her annual budget speech.
Some will go on “employment-linked incentives” for companies, which the government hopes will create jobs.
“The global economy, while performing better than expected, is still in the grip of policy uncertainties,” Sitharman said.
“In this context, India’s economic growth continues to be the shining exception and will remain so in the years ahead,” she added.
Modi’s Bharatiya Janata Party (BJP) fell short of an outright majority in the recent national elections, forcing it into a coalition with regional partners, after its strident Hindu nationalist campaign stumbled over multiple local issues including a jobs crisis and high food inflation.
Modi has overseen India’s ascent to become the world’s fastest-growing major economy.
But his administration has struggled to create enough well-paying jobs for the world’s most populous country, with the International Labour Organization estimating 29 per cent of India’s young university graduates were unemployed in 2022.
Sops for mobile phone makers
Sitharaman said the import duty on mobile phones and some key parts will be cut to 15 per cent from 20 per cent, a move that will directly benefit Apple, which still imports its high-end smartphones into the country despite increasing local production.
She said the cut in import tax on mobile phones, printed circuit board assembly (PCBA) and mobile chargers is in the “interest of consumers.”
Almost 10-12 per cent of the Apple iPhones are imported each year into India and a 5 per cent reduction in tax on the devices will result in a $35-50 million annual benefit to Apple, said Neil Shah, a co-founder at Hong Kong-based Counterpoint Research.
Although Apple has boosted its local production in India through contract manufacturers such as Foxconn and India’s Tata Group, it still imports some of its high-end Pro and Pro Max iPhone models into the country.
Other manufacturers such as Samsung would also benefit, but to a lesser degree as the majority of their smartphones are locally made, said a source with direct knowledge of the matter.
Apple and Samsung did not immediately respond to a request for comment.
Prime Minister Narendra Modi has in recent years promoted India as a smartphone manufacturing hub and the nation’s $24-billion local production scheme covers mobile phones, prompting companies such as Apple, Xiaomi, Samsung and Vivo to expand local operations.
China’s Xiaomi has also in the past asked for tariff reductions on sub-components used in batteries, USB cables and phone covers.
Space sector fund
Sitharaman said a venture capital fund of Rs 10 billion (£92.53m) will be set up to expand its space sector, as the country sets its sights on a larger share of the global space market.
Earlier this year, the BJP government allowed 100 per cent foreign direct investment in the manufacture of satellite systems without official approval and eased the rules for launch vehicles.
Gold, silver import duty cut
The government has slashed import duties on gold and silver to 6 per cent from 15 per cent, a move that industry officials say could boost retail demand and help curtail smuggling in the world’s second-biggest consumer of bullion.
Higher demand for gold from India could boost global prices, which hit a record high this year, although that could widen India’s trade deficit and put pressure on the ailing rupee.
Sitharaman also announced an import duty exemption for 25 critical minerals, including lithium. India has been exploring ways to secure supplies of lithium, a critical raw material used to make electric vehicle batteries.
Relief for salaried class
Sitharaman hiked standard deduction by 50 per cent to Rs 75,000 and tweaked tax slabs under the new income tax regime to provide more money in the hands of salaried class with a view to boost consumption.
She said salaried employees in the new tax regime could save up to Rs 17,500 in income tax annually following the changes announced in the Budget.
Similarly, deduction on family pension for pensioners is proposed to be enhanced from Rs 15,000 to Rs 25,000. “This will provide relief to about four crore salaried individuals and pensioners,” Sitharaman said in her Budget speech.
The new tax slabs under the new income tax regime will be effective from April 1, 2024. (Assessment Year 2025-26).
Concession to some states
Sitharaman’s speech also had specific concessions to the BJP’s regional allies, including highways in the eastern state of Bihar and facilitating “special financial support” for a new state capital in Andhra Pradesh, in the south.
Robust economic growth in India has driven a tax windfall, allowing the government to increase spending while still reducing debt.
Despite new spending plans, Sitharaman said India will lower its fiscal deficit to 4.9 per cent of gross domestic product this financial year, lower than the 5.1 per cent projected during an interim budget in February.
Congress slams budget
Leader of Opposition in the Lok Sabha Rahul Gandhi on Tuesday said the budget makes “hollow promises” to BJP allies at the cost of other states.
The former Congress chief also claimed that the budget was “copy and paste” job of the Congress manifesto for 2024 polls and previous budgets.
Congress general secretary in-charge communications Jairam Ramesh said, “After ten years of denial – where neither the non-biological PM nor his party’s Lok Sabha Elections Manifesto would even mention jobs – the Union Government seems to have finally come around to tacitly admitting that mass unemployment is a national crisis that requires urgent attention.”
“It’s far too late, and as it turns out, far too little – the Budget speech is more focused on posturing than action,” he said in a post on X.
Ramesh further claimed that Sitharaman has taken a leaf out of Congress party’s 2024 Lok Sabha polls manifesto by announcing an internship programme but “in their trademark style”, the scheme has been designed to “grab headlines with arbitrary targets” rather than a programmatic guarantee. (Agencies)
