The government’s focus on creating jobs for informal and gig workers comes at a time when the economy has been struggling to create enough formal jobs. Therefore, the government is leaning on agriculture, manufacturing, micro, small, and medium enterprises (MSMEs), and startups to generate more employment for the country’s burgeoning youth.

For instance, under ‘Building Rural Prosperity and Resilience’, the government aims to generate new businesses and employment for young farmers, marginal and small farmers, landless families and rural women. “The goal is to generate ample opportunities in rural areas so that migration is an option, but not a necessity,” said finance minister Nirmala Sitharaman in her eighth straight budget speech on Saturday.

In fact, migration to the urban regions can be detrimental for many, because skill gaps lead to fewer employment opportunities for those who moved to bigger cities. “There needs to be more clarity on rural job creation. About 60% of our workforce is linked to rural employment and more details are needed on how to create jobs at such a large scale,” said Guruprasad Srinivasan, group chief executive officer (CEO) of staffing firm Quess Corp.

Friday’s Economic Survey for FY25 said that India needs to create an average of 7.85 million non-farm jobs annually until 2030 to effectively engage its growing working population. Therefore, the pressure to generate more jobs in diverse industries becomes crucial.

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Hence, the government will attempt to create employment in labour-intensive sectors. The Focus Product Scheme for footwear and leather sectors is expected to create 2.2 million jobs. The scheme will support design capacity, component manufacturing, and machinery required for production of non-leather quality footwear, besides the support for leather footwear and products. A National Action Plan for Toys, with the aim to make India a global hub for toys is expected to bring in development of clusters, skills, and a manufacturing ecosystem.

Then, there are 10 million registered MSMEs, employing 75 million. To help them achieve higher efficiencies of scale, technological upgradation and better access to capital, the budget raised the investment and turnover limits for classification of all MSMEs by 2.5 and 2 times respectively. “This will give them the confidence to grow and generate employment for our youth,” Sitharaman said.

These efforts to boost employment opportunities come at a time when the The Economic Survey reveals a troubling decline in earnings across self-employed and salaried workers over the past seven years. Male self-employed workers saw their monthly income drop by 9.1% to ₹8,591 in 2023-24 from ₹9,454 in 2017-18, while female self-employed workers faced a steeper 32.2% plunge to just ₹2,950. Salaried employees weren’t spared either—male salaried workers experienced a 6.4% decline in wages to ₹11,858, while female salaried workers took a harder hit with a 12.5% drop to ₹8,855.

Gig workers will be provided healthcare under the government’s flagship health assurance scheme Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), an indicator that gig workforce will get more acceptance. “The government will arrange for gig workers’ identity cards, their registration on the e-Shram portal and healthcare under PM Jan Arogya Yojana,” she noted.

Industry analysts have noted the change as dependency on white-collar workforce reduces. “Job creation for millions cannot be fulfilled by white-collar workforce. Increase in entrepreneurship loans and medical benefits towards gig workers will uniformly add to jobs,” said Suchindra Kumar, partner and leader – education, PwC India.

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The gig economy is set to employ 235 million, or 4.1% of the total workforce, by FY30.

“With employment becoming more and more like a taxicab relationship, we need a framework of reforms that would recognise, legalise and formalise the gig ecosystem,” said Balasubramanian A., senior vice-president and business head for Teamlease Services.

On the startup front, in what would lead to enhancement of credit availability with guarantee cover for startups, the government said it would increase credit availability from ₹10 crore to ₹20 crore, with the guarantee fee being moderated to 1% for loans in 27 focus sectors important for Atmanirbhar Bharat. This, say startup founders and investors, would lead to more startups being able to access capital, expand and generate higher employment opportunities in the country.

The finance minister also pointed out that a boost to tourism and development of 50 new destinations will bring in more jobs. The Centre has allocated ₹2,430 crore for the tourism sector for FY26, a slight increase from ₹2,374.07 crore allocated in FY25.

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A direct impact on employment will be from the national framework to promote Global Capability Centres in emerging tier 2 cities. Today, GCCs are competing with established sectors like IT as an employer of choice and the move will prevent migration of the salaried workforce to metros.

“By unlocking access to a wider talent pool, including professionals who prefer to stay in their hometowns, this initiative will enhance workforce stability and retention,” said Jaspreet Singh, partner and GCC industry leader for consulting firm Grant Thornton Bharat.