Budget Impact: Job market to see incremental growth

Kolkata: The government’s push to woo the middle class and farmers in its final budget before elections may not result in the creation of significant formal job opportunities in the short term. Incremental job creation is likely to happen primarily in consumption-led sectors — where increased disposable income in the hands of consumers from tax sops could boost demand — but don’t expect a big jump, say hiring companies.Unlike last year's budget, when direct incentives were offered to boost formal job creation, no such benefits were announced this time. However, the boost to infrastructure, Digital India, and small and medium enterprises would indirectly help create jobs. There would have been a more positive impact if corporate tax was reduced to 25% across the board as that would have led companies to reinvest in businesses, thus creating more jobs, say experts.“The budget sends out positive signals without going overboard. In any case, things on the ground are better than what the recent NSSO data seem to be throwing up — and this budget will be a positive step in the same forward direction,” said Shiv Agrawal, managing director, ABC Consultants.The consumer and services sectors will do well because if the middle class is being looked after, it will fuel consumption, then demand, then jobs, said Agrawal.According to TeamLease Services cofounder Rituparna Chakraborty, the budget is populist yet broad-based and development-centric, though no direct incentives have been doled out to boost creation of formal jobs. “However, boost on infra, MSME, Digital India and focus on domestic trade shall indirectly boost job creation and hence cannot be undermined,” she said.Increased spending power courtesy of tax sops, etc., will give a boost to sectors such as retail and FMCG, said Kamal Karanth, cofounder of Xpheno, a specialist staffing firm. “There may be an incremental increase in hiring because of demand uptick, but only up to a point, because capital expenditure on the part of companies will happen primarily after election results are in,” Karanth said. “Whatever good sentiment there is in the last six months or so would continue because the budget is not dampening. It’s giving more money to consumers.”Ajit Isaac, chairman of business services provider Quess Corp, is more circumspect. “It’s an election budget; it doesn’t really have anything to fuel the job market. The attention is more on finding votes than finding jobs,” he said. “Reducing corporate tax on the other hand would have forced corporates to reinvest in businesses that would create more jobs.”

from Economic Times http://bit.ly/2WwG6zj