Centre flags rural infrastructure bottlenecks, lack of jobs to state governments

The Centre has shared six concept notes with state governments that call attention to "underemployment" in rural areas and a range of infrastructural and regulatory "bottlenecks" that are holding down job generating manufacturing and services sectors in tier-2 and -3 cities.

The concept notes, shared by seven union ministries and departments, have sought feedback from the state governments ahead of the fourth National Conference of Chief Secretaries, which is scheduled to be held next month under the chairmanship of the prime minister, ET has learnt.

The theme of the conference is 'Promoting Entrepreneurship, Employment and Skilling-Leveraging the Demographic Dividend'. The key areas of discussion are hinged on three pillars-Creating an enabling ecosystem with focus on tier-2/3 cities, MSME and informal employment, and opportunities in the green economy.


The rural 'employment crisis'
One of the concept notes has red flagged the prevalence of "underemployment and disguised unemployment" in rural areas that obscures the true extent of the "employment crisis", with many individuals engaged in low-productivity activities that do not fully utilise their skills.

It added that "insufficient infrastructure and ecosystem support" for MSMEs, urban services and rural non-farm sectors is exacerbating employment challenges".

Similarly, entrepreneurship in rural areas is "stifled by a lack of mentorship and limited access to finance for startups"-just 20% MSMEs have access to formal credit and only 4.4% of the rural workforce is formally skilled, as per the note.

"Ecosystem for MSMEs is often fragmented, with insufficient government support and policy frameworks tailored to the unique needs of rural enterprises", it added.

Several of the concept papers flag concerns on the underwhelming ecosystem in tier-2 and -3 cities.

Tier-2/3 cities-bottlenecks
The concept paper by the ministry of electronics and information technology (Meity) points out how the services sector growth and employment is concentrated in tier-1 cities with just four cities (Bengaluru, Mumbai/Pune, Delhi-NCR and Hyderabad) housing 75% of the 4.5 million IT employees.

It underlines that despite a slew of government initiatives from Startup India to Skill India Mission, Digital India programme and steps towards ease of doing business, several challenges persist.

"Many tier-2 and tier-3 cities do not have adequate infrastructure such as reliable power supply, efficient transportation and internet connectivity. The skill set available in such cities do not match the industry requirements due to scarcity in quality training centres, outdated curriculum and standardisation in the services. Access to funding at low cost and the limited market access is another problem faced by the entrepreneurs. Navigating the regulatory environment can be challenging for small businesses," the Meity paper said.

The potential of tier-2/3 cities is largely untapped even as India needs to create 4 million new jobs every year in the services sector, it added.

The Department for Promotion of Industry and Internal Trade (DPIIT) has also highlighted similar challenges in promoting manufacturing in tier-2/3 cities-from inadequate infrastructure to outdated and inflexible master plans-leading to inefficient land use, environmental issues delaying infrastructure development, cumbersome regulatory environment and outdated municipal and state laws.

It has recommended creation of an integrated land authority with overarching power for business-related land matters and disputes, need for state/city logistics policies and district-level planning and review of municipal/local laws to enable single-window approval system, besides ensuring a pool of skilled manpower in and around tier-2/3 cities.