Ag­gres­sive growth plan of etail­ers, food de­liv­ery cos and tax re­form boost hir­ing

The Economic Times - - Front Page - Prachi.Verma @times­group.com

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.

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