Budget 2025 Expectations: CII Suggests 7-Point Agenda To Increase Employment In Upcoming Union Budget

As the countdown to the Union Budget 2025-26 begins, the Confederation of Indian Industry (CII) has put forward a comprehensive list of recommendations to address India's employment challenges and harness the country's demographic dividend. With the Budget scheduled for February 1, 2025, these proposals aim to drive economic growth, enhance productivity, and create inclusive job opportunities across sectors.

Integrated Employment Policy

CII has called for the introduction of an Integrated National Employment Policy to consolidate and streamline various employment-generating schemes under one umbrella. This unified framework could build on the National Career Service (NCS) portal, ensuring seamless data flow from state and central government initiatives.

To complement this, CII proposed the establishment of a Universal Labour Information Management System (ULIMS) under the NCS. This system would provide critical insights into job opportunities, skills demand, and training programs, enabling effective workforce planning.

Chandrajit Banerjee, Director General of CII, emphasized, "India stands at a unique juncture where its demographic dividend presents a tremendous opportunity to propel economic growth and social transformation. Employment generation is a critical pillar in this journey. Coupled with higher employment, India also needs to ensure that productivity goes up."

Banerjee also suggested setting up an expert committee in the Budget to study India's Incremental Capital Output Ratio (ICOR) and recommend actionable measures to improve productivity.

Tax Incentives

CII has proposed a revision of Section 80JJAA of the Income Tax Act to further incentivize job creation. The new provision, as recommended, should continue as a Chapter VIA deduction from gross total income, applicable even under the concessional tax regime.

Key highlights of the proposal include:

Eligibility for taxpayers engaged in business or profession and liable to tax audit.
Exclusion of employees recruited as part of business restructuring or reorganization.
Deduction for the first three years of new employment, capped at ₹1 lakh per month per employee.

Boosting Employment-Intensive Sectors

To create jobs on a large scale, CII advocated for targeted support to employment-intensive sectors such as construction, tourism, textiles, and low-skilled manufacturing. These sectors, CII noted, could benefit from streamlined tariff structures, enhanced Production/Employment Linked Incentive Schemes, and better alignment of Free Trade Agreements (FTAs) to boost exports and generate employment.

Incentivizing Rural Employment

For rural areas, CII suggested launching an internship program for college-educated youth to work in government offices. This initiative would strengthen manpower resources for the effective implementation of rural development programs.

Empowering Women

Addressing India's low female labour force participation, CII proposed several initiatives like:
Constructing dormitories for women workers using CSR funds.
Formalizing sectors like the care economy to create structured job opportunities.
Establishing government-supported creches in industrial clusters to support working mothers.
Additionally, the industry body called for gender-sensitive frameworks in skill development and employment policies, enabling economic empowerment for women.

Strengthening Social Security

CII urged the government to prioritize the rollout of labour codes while ensuring comprehensive social security coverage for gig and platform workers. These measures would modernize India's employment sector, offering better protection to workers in emerging job sectors.

Global Employment Opportunities

Recognizing the importance of overseas employment, CII proposed the establishment of an International Mobility Authority under the Ministry of External Affairs. This authority would:
Facilitate government-to-government (G2G) collaborations to create overseas job opportunities for Indian youth.
Develop skill development programs aligned with global demands in partnership with the Ministry of Skill Development and Entrepreneurship.
Include cultural training and foreign language skills to prepare workers for international markets.

Tapping the Demographic Dividend

CII emphasized that employment generation must go hand-in-hand with improved productivity. The Union Budget could take steps to improve metrics like ICOR to maximize returns on capital investments. Banerjee highlighted that India's demographic dividend presents a "tremendous opportunity" to drive economic growth and social transformation if coupled with the right policy measures.