The government’s decision to slash corporate tax rates in late 2019 was a well-considered move to attract investments that has made a lot of difference, and a major transition is under way in the industry-labour relationship, Union Finance and Corporate Affairs Minister Nirmala Sitharaman said on Friday.
She was replying to a query on the efficacy of corporate tax cuts and the production-linked incentive schemes, some of which may be fuelling capital-intensive investments that create fewer jobs, during an interaction with students after delivering the Pandit Hriday Nath Kunzru Memorial Lecture 2024 at her alma mater, the Jawaharlal Nehru University (JNU).
Also read: The Hindu Explains | What corporate tax cut means for the Indian economy
Noting that India had a very high level of taxation for companies, the Minister said tax rates were cut with a view to bring in more investments, which in turn would create jobs and trigger a “virtuous cycle” in the economy. Many countries were “contemplating” such tax structure changes to attract investments at the time, she said, stressing that greenfield as well as brownfield investments are now happening.
“Even now, I think that is the way to go forward and ensure additional capacities are coming in areas that are going to be job-creators. If there is a perception that it may not have resulted in as many jobs as was in the olden days of investments, it is also because... even as we took this decision, we were aware the industrial revolution called 4.0 was setting in, Web 3.0 was coming in, which is now talked about as AI and GPT,” she said.
‘Upskilling must’
“The matter of fact is that industry, particularly in manufacturing, is going through a huge transition, a reset. And when resets happen, the labour force is also catching up with skills that are required to meet with that reset. So there will be requirement of labour... that is why the government has ramped up skilling and upskilling [for] people to get into industry,” the Minister said.
The industry, she said, wants labour to be at a different level now, as it has introduced robotics, and digitised the operations. “So, the long and short of it, there is a transition and reset happening between industry and labour. If we are looking at only the old-fashioned [sectors] like cement and iron and steel…. no, there are newer industries coming and newer workforce is coming out, they are being trained and they are being put in,” Ms. Sitharaman said.
