‘Not a viable strategy’: Hotmail founder reacts to FM Sitharaman’s 230 million gig job target by 2030

Hotmail founder Sabeer Bhatia has raised concerns over India’s plans to dramatically expand gig economy employment, arguing that the country needs to focus on long-term, skill-driven jobs instead. “Last week at Stanford, I heard Smt. Nirmala Sitharaman say India plans to expand GIG economy jobs from 7.1M to 230M by 2030 to create employment. With respect, I don’t think this is a viable long-term strategy. India needs stable, skill-driven jobs—not just gigs,” Bhatia posted on X.

Responding to a question on job creation during a fireside chat at Stanford University’s Hoover Institution, Finance Minister Nirmala Sitharaman had detailed the government’s vision on employment, particularly through the services and gig sectors.

“Manufacturing is undergoing rapid change. There is a complete reset in India too, it is happening. But just so we get the perspective right on this — in India’s GDP, the service sector’s contribution is about 64%. And if that is one side, at the lower end, the gig economy’s growth is rapid. In fact, 7.1 million people are in the gig economy today, we expect that to go to 23% by 2030. That’s not manufacturing,” the finance minister said.  

“Similarly, your 64% contribution is also not from manufacturing. It is from the service sector. It could be IT-related or it could be fintech-related. It could be education, it could be health-related. So service sector is disproportionately contributing both to the GDP and for employment,” she said.

“But that’s not to say that there is no increase in employment. 7.1 million people are in the gig economy today as of 2021–22 data and that would go to 230 million by 2030. That is the rough estimate. So that’s not manufacturing, and the contribution — 64% — is also focusing on IT, fintech, education, and health.”

Sitharaman also reiterated the government’s commitment to boosting manufacturing: “But that’s not to say that manufacturing should be left aside. We’ve been hoping to increase the contribution of manufacturing from 12% to about 22%–23%. But that is very clearly in the last 10 years, sharp focus on 14 sectors which we identify as sunrise sectors — which can be semiconductors, renewable energy components, medical devices, or, because we’ve launched a hydrogen mission — in those areas, batteries and so on.”

She added: “So if those are the sectors for which we want to give a push in order to strengthen our manufacturing, we’ve come up with schemes which will support them and that’s paid off as well. That is why you found Apple phone manufacturing has shifted to India from China. I would think with its entire ecosystem, that today most of the phone manufacturing which happens — particularly those which are being exported from India, particularly for Apple — nearly 60% is manufactured in India. That was a very quick and rapid policy-driven support for bringing that entire ecosystem to India.”

Explaining the policy incentive structure, she said: “So with those 14 sectors — productivity linked, production linked incentives being offered — for every additional unit that you produce and export, you’re going to get an incentive from the government. And that is aimed at such sectors which also will have greater employment potential. So on the one hand electronic goods, similarly labour-intensive sectors like textiles, leather — meaning leather and footwear — these sectors are being given incentives.”

She also highlighted support for first-time job seekers: “In the July budget — which was not a full year’s budget — immediately after the election to the third term of Prime Minister Modi, we came up with four different schemes where we support first-time job seekers if they formally entered into a formal enrolling in the EPFO. In other words, if they formally get into jobs, the first employees get an incentive. Similarly, for employers who take in new first-time employees on their job roles, we give the support for the employee as much as the employer as well.”

“So we are incentivising and providing subsidy for employers who bring in newer, first-time employees on board into their regular, digitized and formal working space. Besides this, we are also ensuring that we extend — I mentioned the gig workers — we provide them health cover for up to five lakh rupees per year and that is — the premium is paid by the government,” Sitharaman said.