New Delhi: The central government has hatched a new plan to generate jobs: empower the informal economy.

Accordingly, the skills ministry proposes to reach out to tens of thousands of “barefoot entrepreneurs", largely in the informal economy, and to train, mentor and equip them to join the formal economy and help in creating hundreds of thousands of new jobs, according to at least two government officials.

These barefoot entrepreneurs are those engaged in businesses ranging from kirana stores to tailoring shops, from roadside vendors to small business owners engaged in sundry services in smaller towns and subdivisions.

The skills ministry has identified Chhapra in Bihar to launch a pilot project.

“If 15 million of such establishments add even one more employee to their current capacity then 15 million new jobs will get created," said a top government official, one of the two cited earlier. Both spoke on condition of anonymity.

The new approach comes at a time when the Bharatiya Janata Party-National Democratic Alliance government has been targeted by the opposition—especially in the ongoing election campaign for the Gujarat assembly—for allegedly not generating enough jobs.

Nearly 30 million establishments are in the informal economy in India according to government estimates, said the two skills ministry officials cited earlier.

“The aim is to achieve scale on this. A formal scheme is being formulated for implementing this initiative," the second of the two officials said, adding that India is a “country of entrepreneurs and helping these people at the grassroots will boost employment generation".

On Thursday at a skills ministry event, finance minister Arun Jaitley had underlined the challenges of limited job creation capacity in the formal economy. “The strength of India’s economy will be entrepreneurship," Jaitley said, adding that the government has to ensure that it does not “restrict the youth. We let them unleash their energy, allow them to move away from the beaten track and build new ideas for the new India."

According to the officials cited earlier, the pilot project will not just explore establishing small businesses, but also mentor potential students from skill centres.

“If some one wants to open a cycle store, or a cloth store or a restaurant, we should be able to guide him or her. There are government schemes like Mudra from where the person can get a loan to jumpstart his business instead of working for someone and earn let’s say Rs7,000-8,000," said the second official.

The first official said once millions of small businesses are hand-held to become self-sustainable it would expand the base for the goods and services tax and also formalize the informal economy.

“Jobs needs to be created at the place where you have candidates. Else we see this migration problem. One may argue that it won’t be called quality jobs but you have to remember that even after engineering, thousands of students are not even earning Rs15,000 a month," this person said.

“Any effort that boosts entrepreneurship will create jobs, that’s better than a situation where the problem is, as some say right now, jobless growth," said S. Parasuraman, director at the Tata Institute of Social Science.

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