Relief for corporates means brakes on job cuts

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 profit-making businesses, especially in the domestic consumption driven 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 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.