India’s New Budget Targets Job Creation and Middle-Class Support

Indian Finance Minister Nirmala Sitharaman unveiled the first budget of Prime Minister Narendra Modi’s new administration on Tuesday, focusing on job creation and middle-class support. The government plans to allocate 2 trillion rupees ($24 billion) over the next five years to stimulate employment across various sectors, with particular emphasis on manufacturing.

The budget introduces employment-linked incentives for companies, aiming to boost job opportunities and stimulate economic growth. In addition to this, the government will launch programs designed to enhance skills and provide subsidized loans for higher education, in a bid to address unemployment and support the middle class. India’s official unemployment rate in urban areas stands close to 6%, but private estimates from the Centre For Monitoring Indian Economy suggest it is closer to 9%. Although government data indicates that 20 million new job opportunities have been created annually since fiscal 2017-18, economists note that a significant portion of these jobs are in self-employment or temporary agricultural roles, rather than formal positions with regular wages.

The recent general election saw Modi’s Bharatiya Janata Party (BJP) lose its absolute majority, resulting in a coalition government reliant on allies for the first time in over a decade. In response, Sitharaman also announced plans to expedite loans from multilateral agencies for Bihar and Andhra Pradesh, both governed by key allies, to bolster regional development and support the coalition government’s objectives.