Budget 2024: The four challenges that could form the backdrop for Centre's moves

livemint.com:

NEW DELHI : Going into the 2024 general elections, the ruling Bharatiya Janata Party (BJP) played up its achievements on jobs, welfare schemes and growth. The shock from an electoral result way below expectations makes this a major budget for the party, leading to a core focus on economic revival at an all-round level. With major state elections due later this year and next year, the BJP-led coalition has its work cut out on these four fronts.

The big challenge is to generate jobs, of good quality. Total jobs have increased from 466 million in 2019 to 544.5 million in 2022, according to the India Employment Report 2024. However, much of this is either in the self-employed space, especially unpaid family work in rural areas and among women, or in casual work.

Both spaces are characterized either by low wages or barriers on growth. The other major challenge facing the economy is wages earned by workers. Rural wages for non-agricultural labourers, after adjusting for inflation, has been essentially flat since 2014-15.

Wages for agricultural workers have been better, but only marginally so, rising by 6% over the last nine years for men and 11% for women. The government has been urging the private sector to invest in setting up new capacity, but results have been lacklustre. Capital expenditure (fixed investment) by private corporations as a share of gross domestic product (GDP) has essentially been flat over the last decade, though it has picked up over the post-covid recovery.

A critical pre-requisite for private capital expenditure to take off is strong consumption growth. During the period that private capex was being circumspect, consumption growth had been strong, creating an offset. But in 2023-24, to compound matters,