Article: What to expect from the Union Budget?

#HRIndustry

What to expect from the Union Budget?

With less than two days to go for the Union Budget, the industry is pinning its cautious hopes on the budget.
What to expect from the Union Budget?

With less than two days to go for the Union Budget, expectations are running high and the industry is pinning its cautious hopes on the budget, which is to be presented on 28th February 2015.

The positive sentiments of growth and development with increased focus on youth, skill development, job creation and business friendly measures gave an unprecedented mandate to the central government in last general elections of 2014. The government in its last nine months of working has been working towards not only raising the standard of living in India but also improving the country’s image in global economic and business ecosystem through various effective steps, laws, and debates. The business friendly measures and ease of working has percolated to the job market with positive and increased hiring estimates across the industries. Whether it is infrastructure development or parking additional efforts on reducing inflation numbers, buzz around rate cuts by the apex bank, or GDP estimates, India growth story is here to strengthen further. However, in this budget the urgent need is to ensure the nation that many of the initial steps taken would be monitored properly to achieve desired results and many more would follow to support them, besides new ones that are needed.

FICCI released the findings of the latest round of FICCI’s Business Confidence Survey as a precursor to the Union Budget. The poll reveals that the mood of Indian industry and trade is one of cautious optimism.

The respondents to the survey were pinning their hopes on the direction of reforms that the Finance Minister will indicate in his budget proposals. They expect the government to continue pursuing the broad economic agenda and take tangible steps towards its completion. It was unanimously felt by the respondents that the government should step up action on ease of doing business and especially towards simplification of taxes in the forthcoming Budget. A majority of the respondents also expect the passage of Goods and Services Tax bill.

The Overall Business Confidence Index stood at 70.5, a tad higher than the value of 70.4 in the previous survey. Further, the participants said that they are also looking forward to labour reforms and incentives for sectors including manufacturing, infrastructure and real estate. As per the survey results, the proportion of respondents anticipating ‘moderately to substantially better’ performance over the near term noted a marginal slip at the economy, industry and firm level. Nonetheless, a majority of participants remained optimistic about the future prospects. 83% of the participants in the current survey cited a ‘moderately to substantially better’ overall economic situation over the next six months, vis-a-vis 84% stating likewise in the last round. The corresponding figure at the industry and firm level was 72% and & 74% respectively.

In a CEOs’ Opinion Poll – conducted by CII, the results showed that industry is pinning its hopes high on the budget. The majority believe that an increase in capital expenditure outlay in FY 16 will be budgeted at Rs 70000 crores. To fund this capex, apart from subsidy rationalization, revenues can be augmented through aggressive disinvestment of government holdings in PSEs. While the disinvestment target in FY 15 was Rs 63000 crores, CEOs expect this to be Rs 75000 crores and above in FY 16. 

It is generally believed that the government needs to reduce revenue expenditure and increase spending in capex. The revenue deficit metric is critical from fiscal consolidation point of view. The Kelkar Committee roadmap target for revenue deficit is FY 15 was 2.0% of GDP. The budget was 2.9%. According to majority of CEOs, the revenue deficit target for the coming year would be between 2.6 – 2.8%. On the critical figure of fiscal deficit, the majority of CEOs believe that this would be between 3.7 – 4.0% of GDP. 

Significantly, the CEOs believed that a framework for GST would be announced, which would tilt the balance towards higher GST rate, in the interest of revenue neutrality. On GAAR, the CEOs were unanimous in their expectation of a 2 year deferral. Pinning hopes on the government’s ability to navigate key policy reforms through the parliament, majority of the CEOs believe that the government would be able to regularize the eight ordinances that were issued between the last and this session of parliament. 

The Budget proposals to be presented by the Finance Minister would go a long way in reviving investors’ sentiments and set the ‘Make in India’ tone for providing fillip to manufacturing. The steps announced now will only be the beginning of a journey towards a sustained high growth trajectory along with macroeconomic stabilization, opined the CII CEOs Opinion Poll Survey.

Budget 2015 Wish list

Collating the expectations from the world of HR, we bring different viewpoints from industry stalwarts below on the upcoming Union Budget:

Expectations by G S Ramesh, Chairman of Layam Group

The upcoming budget will have major focus on ‘Skill India.’  If India has to become of global quality, skill is the only answer. With the emphasis laid on skill development and make in India campaign, recruiters also anticipate the government to find ways of generating employment opportunities in tier 2 and 3 cities.  The government should also make skill development in the public-private partnership in skill development, which in turn will make India a lucrative destination for both domestic and foreign investors.

Over and above, the industry is looking forward to certain concession in excise and taxation to make the product viable. Industry is hoping that the non-taxable gift limit from the existing Rs 5,000 per annum will be changed to Rs 10,000 per annum.

Expectations by Gayathri Vasudevan, Co-Founder & CEO of LabourNet Services India Pvt Ltd.

R&D expenses that may increase the efficiency of skill development and pedagogy development should be tax exempted. Simulators, multimedia and e-learning should be made cost effective and easily available for training providers.

  1.             Technological innovation funding leading to out-of-the-box skilling techniques may be given tax exemptions.
  2. Investments made in skills for the community to be tax exempted.
  3. Any company doing business with skill development company should be exempted from tax
  4. PF/ESI exemption for candidates certified by NSDC for 1 year. This would encourage more companies to embrace trained manpower
  5. Tax breaks to the extent of total salary paid up to 2 years after training for people hiring NSDC certified candidates

 

Expectations by Mr. Kamal Karanth, MD, Kelly Services & OCG India

Hiring in the e-commerce sector will continue to gain traction as the sector is gaining momentum in India - most of the jobs will be created at multiple levels with bulk hiring taking place in the BPO segment. From a skills perspective, we can say that the demand for skilled workers continues to be on the rise in the pharma and healthcare sectors. Employment exchange initiatives by the government to create jobs along with changes in the labour reforms will signal a healthy job market in the near future. Also, Automotive Mission Plan will drive hiring as it aims to create 25 million jobs by 2016. There is wide expectation that this will be a dream budget, which will have policy initiatives to create more jobs and kick start the investment cycle. Employment exchanges in educational hubs and industrial clusters will help in a better demand-supply match.  An investment of INR 760 crores on skill development and entrepreneurship will also bring in thrust in the job market which will further propel economic growth.”

Expectations by Vasu Saksena, Chief Executive Officer, MeritTrac 

The establishment of Skill Ministry and the Make in India campaign are clear indications on where the Government would like to invest in the coming year. These initiatives are expected to influence the demand and supply side of talent – a very important step towards making India’s demographic dividend count. We also anticipate a growth in services sector as a result of the boom in core sectors. In order to reap the benefits, the Government should invest in creating an environment conducive for business by ensuring a fair play for corporates – big and small. 

Expectations by Ms. Aditi Avasthi(CEO & Founder,Embibe.com) 

"It's time for the government to think about the roi on education spend vis a vis employability. Education in india needs a more holistic approach - measured not just by access numbers but also by learning outcomes created. There is no conversation around the role ed tech can play in improving pass rates across the country. With a population like ours the access and quality problem has to be solved together. The budget this year should create incentives and subsidies for both companies innovating in this space and students wanting to use online as a channel to achieve their goals. Also, public sector schools should have a clear digital budget tied to improving learning outcomes at scale, not just educating more students."

Topics: #HRIndustry

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