A large chunk of the medium and small-scale enterprises (MSMEs), which collectively form the country’s biggest employers, fall in the bracket. The reduction of the ESI contribution will bring some much-needed financial relief for workers in the lower end of the economy. To really cash in on the country’s so-called democratic dividend, providing employment for India’s youth bulge is the state’s biggest challenge. On this front, where unorganized sector jobs are a suboptimal solution, being much less productive than formal jobs, it falls upon the government to increase the benefits of formality. With this provision, the Modi government seems to have ticked the correct box—but many more such boxes remain to be ticked.

Source: Mint June 14, 2019 14:03 UTC