“This (employment generation) is one of my highest priorities. India is a capital scarce, labour abundant country. Yet, the corporate tax structure has favoured capital intensive production.
“Tax benefits like accelerated depreciation and investment allowance have created an artificial bias against labour,” Modi told the Bloomberg India Economic Forum 2016, held here to commemorate the media group’s 20 years in India.
Hae said the existing labour regulations have tended to promote informal employment without social protection, rather than formal employment.
Mentioning the steps the NDA government has taken to change the tax structure, he said: “If any firm subject to tax audit increases its work force, it will get a 30 percent weighted tax deduction on the extra wage cost for three years.”
“Earlier, such a benefit was available only to very few industrial employers and had so many restrictions that it was practically ineffective.”
Now the benefit will cover all sectors including services, for employees with a salary up to Rs.25,000 per month, Modi said.
He also said the government has taken the responsibility for paying pension contributions for three years for all new persons enrolling in the Employee Provident Fund.
“This will apply to those with wages up to Rs.15,000 per month. We expect lakhs of the unemployed, and the informally employed, to benefit from these steps,” he said.
Touching upon the progress of the Pradhan Mantri Mudra Yojana, he said: “Over 31 million loans have been sanctioned to entrepreneurs for a total value of nearly $19 billion this year.”
According to the prime minister, 77 percent of these entrepreneurs are women and 22 percent of them are from the scheduled castes and scheduled tribes.
“Even if we assume conservatively that on average, each enterprise creates just one sustainable job, this initiative itself amounts to 31 million in new employment.”
The Stand-Up India scheme will also provide 250,000 entrepreneurship loans to women and scheduled castes and scheduled tribes, he added.