Sanjay Modi, Managing Director, Monster.com
Without any doubt, 2016 was a tumultuous year for India. The year witnessed an extraordinary economic scenario and all hopes are pinned on to the upcoming budget 2017 as the nation awaits to see what the future holds. The financial year ended with demonetisation as a measure to combat black money, the impact of the same still uncertain.
FULL COVERAGE: UNION BUDGET 2017-18
It will definitely slow down things in the near future but may prove to be beneficial over a mid to long term period. The Goods and Services Tax (GST) is another news making move by the government seen in the last couple of months. If the government is able to launch it as per their forecast in July '17, we will see negligible impact in 2017 though prices of some goods where the effective tax rate is lower than the GST rate may go up. However in the long run it will boost consumption, increase our competitiveness and ease of doing business.
FULL COVERAGE: RAILWAY BUDGET 2017-18
The expectation from the government is to take constructive steps that will help boost and revive the economy and confidence of industries, businesses and end- consumers. In order to give boost to 'Make in India' initiative, we would be keen to see what steps the government of India would take to make India manufacturing become a link in the global supply chain of goods. This would be easy to attain from short to mid- term basis and pave way for setting up of industries to manufacture goods completely in India.
The Modi government has stressed on skilling and job creation as its top priorities. In this last one year we have seen various compelling initiatives; starting with the focus on infrastructure growth, Smart Cities, driving the agenda for job creation & skilling, and until very recent the announcement of 'Digital India' and 'Start-Up India, Stand Up India'.
The job market has been constantly evolving during the last one year, with technology taking the lead. This coupled with the government's yet another ambitious initiative of digitisation, the focus should be on increasing penetration of digital technologies across the nation. This leads to skills training and education. According to Monster Employment Index, over the past few months, the education sector has sustained strong growth in comparison to other sectors. With the New Education Policy, the government has been swiftly introducing noteworthy changes into the system.
Another sector undergoing a phase of disruption is IT with automation and increased focus on digitisation, further reiterating the need for upskilling. While automation replaces machines for routine jobs, at the same time it increases the demand for high skilled jobs, non-routine jobs. It also creates opportunities for low-skilled non-routine jobs in activities such as caring and personal services that are hard to automate.
What we need to factor is the impact on India IT sector due to planned restrictions on labor movement as well as minimum wage slab by US govt. It will increase costs and have a negative impact on the bottom line of IT companies, a sector which is one of the largest employers in the organized sector.
Another awaited announcement is the reduction in corporate tax rate. In the previous budget, the finance minister had laid down the government's vision to reduce corporate tax rates to 25% with a simultaneous and phased withdrawal of various direct tax exemptions. The corporate tax rate was lowered to 29% for companies with turnover not exceeding Rs. 5 crore. However, the general corporate tax rate still remained same at 30%. It will be interesting to see how the Finance Minister will place corporate tax and thereby impact businesses across sectors.
The Union Budget 2017-18 is expected to be a common man's budget with positive changes in the income tax structure to soothe the cash ban pain. The year-end speech by the PM also hinted toward several schemes for farmers and traders, among others while the thrust is expected to be on job creation, universal basic income for poor and low-cost housing. We are hopeful for a strong and reinvigorating budget that can help enthuse the economy and lead India on its growth trajectory.
Sanjay Modi, Managing Director, Monster.com (APAC & Middle East)