Last year saw muted growth for businesses. So, the business community is keenly looking at this Budget and is expecting a shot in the arm to boost growth rate and thereby, impact job creation.
There are many stumbling blocks for businesses to growth. Some of them have to be addressed promptly by the Government, namely:
Talent crunch continues to be a big issue industries are facing and the gap seems to widen every year. This Budget needs to have initiatives that will promote skill development, research and higher education. This can happen through entry of foreign universities or setting up national boards to focus on the same.
India does not have any flexi staffing industry specific laws. Absence of it is leading to ambiguous interpretation of current labour laws which are applicable to all. Also, in the present condition, roles of primary employer, staffing agency and benefits to temporary workforce are not clear.
Require better clarity on taxes applicable for services provided by staffing companies. TDS applicable u/s 194(c) and issuance of certificate u/s 197 of Income Tax Act, requires attention. Considering the business model of staffing companies, Service tax is to be levied on service charges and not total cost of service.
It is recommended that, flexibility be extended to flexi-staff to voluntarily contribute to either NPS or EPFO instead of mandatory PF deduction. As the flexi-staff churn is high and withdrawal or transfer of PF is a long drawn process, if the aforementioned flexibility is extended, it will greatly benefit workers.
The Budget should have policies to promote manufacturing and agrarian economy. Services sector, a major contributor to India’s GDP, cannot continue to sustain this growth rate without a corresponding increase of growth in manufacturing and agrarian sector. Studies have shown that one per cent fall in agricultural output will lead to 0.52 per cent drop in industrial output which in turn will lead to 0.52 per cent growth deceleration in overall growth. Policies to promote higher agrarian output and farmers’ welfare are a must for India’s road to higher growth.
Unified voice on policies is a must for companies to avail themselves of benefits confidently. Minimum Alternate Tax is waived by Ministry of Commerce for companies in SEZ, however, Ministry of Finance negates this benefit and companies are levied tax. Also, businesses and agencies are challenged with numerous central and state laws to comply with. If Government can bring in policy reforms which ensures no ambiguity and creates an environment for business to operate through a single window system, it would be a great boon.
Implement systems to widen the tax base to reduce burden on organised sector. Owing to operational difficulties, Government is unable to tap into unorganised sector and generate more income through taxes and it results in policies that are not conducive for organised sector.
(The writer is Managing Director and CEO, Randstad India.)