Aggressive growth plan of etailers, food delivery cos and tax reform boost hiring
New Delhi: Temp hiring numbers are at a four-year high as the goods and services tax (GST) has driven formalisation of the economy and ecommerce and food delivery broaden their footprint, said staffing firms such as TeamLease Services, Randstad, Quess and Xpheno. The number of new temp jobs is likely to touch 300,000, up from 130,000 last year, they estimate.
“There is a five-fold increase in temp hiring since 2015. For its part, GST not just fuelled, it compelled formalisation of labour. As a result, organised temporary staffing became the much-needed enabler for corporate India,” said Rituparna Chakraborty, cofounder, TeamLease Services. Before GST was rolled out on
July 1 last year, unorganised and unregistered staffing companies had a pricing advantage because they didn’t charge service tax. Since then, there is an incentive for customers to choose the services of tax-compliant staffing firms, as GST allows them to claim input tax credit.
“This has suddenly made services of most service providers more economical than in preGST days. They can now compete against unregistered suppliers. In fact, they are in an advantageous position visa-vis these unregistered players,” said Waman Parkhi, partner, indirect tax, KPMG. Ecommerce has been another growth driver, especially due to leaders Flipkart and Amazon. As ET reported recently, they have created about 120,000 new temporary jobs to service the festive season ecommerce surge.
There is an incentive for customers to choose services of tax-compliant staffing firms as GST allows them to claim input tax credit
One of these was a discussion on the capital framework. ET had reported on November 6 that the government would press for a resolution of the issues raised by it at the board meeting.
“Currently, the RBI’s capital needs put its provisioning at 27%, while most central banks have theirs at 14%. Our calculations state that if RBI provisions at 14%, it can free up to Rs 3.6 lakh crore,” a top official said.
The other issues which have been raised by the government include a special refinance window for nonbanking finance companies, housing finance companies and mutual funds; easier credit terms for micro, medium and small enterprises; relaxation in the prompt corrective action (PCA) regime for the stressed banks; and lower capital requirement for banks.
NO FISCAL URGENCY
Garg said the government’s budget was under control. “We will end the FY19 with FD (fiscal deficit) of 3.3%. Government has actually foregone (Rs) 70,000 crore of budgeted market borrowing this year,” he said.
The government’s fiscal deficit at end of September reached 95.3% of the full year estimate for FY19, sparking concerns of a breach of the target of 3.3% of GDP for the year. In FY18, at the end of September, the FD had been better at 91.3% of budget but government had ended up missing the target of 3.2% of GDP, ending the year at 3.5%. “Government’s FD in FY14 was 5.1%. From 2014-15 onwards, the government has succeeded in bringing it down substantially,” Garg said.