A cure for job losses, not a tonic for new ones

The Times of India (New Delhi edition) - - Times Nation - Nam­rata.Singh @times­group.com

Mum­bai: The cor­po­rate tax bo­nanza is likely to stall the ex­tent of job losses, but whether it will lead to job cre­ation is some­thing that re­mains to be seen.

Due to the pre­vail­ing slow­down, the spec­tre of job losses was grad­u­ally ex­pand­ing from the be­lea­guered au­to­mo­biles to con­sumer prod­ucts, thus lim­it­ing job op­por­tu­ni­ties. The re­duc­tion in cor­po­rate taxes, and the re­sul­tant gains in prof­its for com­pa­nies that fall in the req­ui­site tax brack­ets are seen as a feel­good fac­tor on the jobs front.

TeamLease Ser­vices EVP and co-founder Ri­tu­parna Chakrabort­y said, “This is a short-term re­lief and would ben­e­fit the more tra­di­tional firms for whom this re­duc­tion will di­rectly boost their bot­tom­line, which will help them ex­pand and be­come ag­gres­sive — all of which should im­pact job cre­ation pos­i­tively.”

Chakrabort­y said the pos­si­ble rise in jobs is likely to be more in tra­di­tional prof­it­mak­ing busi­nesses, espe­cially in the do­mes­tic con­sump­tion­driven busi­nesses like FMCG, con­sumer durables and re­tail. “We will have to wait and see its im­pact on auto and al­lied busi­nesses,” she added.

On the man­u­fac­tur­ing

Share in to­tal

prof­its (%) Share in to­tal tax

li­a­bilty (%)

side, the mea­sure is ex­pected to en­cour­age the newer set­ups, lead­ing to a boost in jobs to some ex­tent. “How­ever, this re­lief may not be suf­fi­cient to re­vive the man­u­fac­tur­ing sec­tor,” said Chakrabort­y.

An­tal In­ter­na­tional, In­dia MD, Joseph Deva­sia said more cash in the hands of busi­nesses should en­sure firms at least hold on to ex­ist­ing work­ers and don’t re­trench staff. Deva­sia was, how­ever, cau­tious as to whether this is suf­fi­cient for cre­at­ing new jobs. “Only gov­ern­ment-in­duced in­vest­ments can cre­ate jobs. It is also likely that firms may use th­ese prof­its to re­tire their debt. How much of this will trans­late into new jobs will have to be seen,” said Deva­sia.

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