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Layoff drive continues in tech giants globally amid fears of recession. 5 points

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Several tech companies around the world are executing mass lay offs amid what is seen as fears of global recession and slowdown. Reports suggest, Microsoft Corporations is among the recent companies to join the laying off wave with cutting down five percent of its workforce, booting out around 11,000 roles. This comes months after the tech giant laid off around 1,000 employees across divisions.

Thousands of employees entered the new year with grim tidings as over 30,000 workers across the globe lost their jobs in the first of January, almost double the number of employees laid off in December last year. Data suggests, companies including Amazon, Vimeo, Salesforce among others have sacked a total of 30,611 people in the first six days of January.

Read| Indian employees hit by Amazon layoffs speak up: ‘First I lost my father…’

The impact of layoffs has been felt in India as well. Several Indian tech companies have recently cut down on its workforce. Multinational companies also carried out their laying off drive in the country. Wallstreet banking giant Goldman Sachs laid off around 700 employees in the country.

Top companies that laid off employees recently:

  1. Meta Platforms Inc, Amazon, Twitter Inc and Snap Inc have jointly laid off over 97,000 roles in 2022, citing slowing down of the economy and shareholder pressure. This number has raised by 649 percent as compared with 2021.
  2. Video hosting platform Vimeo announced cutting down 11 percent of its workforce amid ‘difficult times’. Crypto exchange Huobi also planned to lay off 20 percent of its staff.
  3. Software company Salesforce notified 10 percent of its workforce will be slashed, almost half of the number of employees it hired during pandemic.
  4. In India, social media platform ShareChat has laid off 20 percent of its workforce citing ‘uncertain market conditions’. Cab aggregator Ola fired over 200 employees as a part of its restructuring exercise.
  5. In a message to global staff, Amazon CEO Andy Jassy mentioned most role eliminations will take place in the Amazon Stores and PXT organisations. He also remarked how ‘grateful’ he was to those impacted by these job reductions.

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Amazon could be sitting on another $3.5 billion business, Morgan Stanley says

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Budget 2023: Here’s how you can download the Budget document

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The Union Budget 2023-24 has been presented by Finance Minister Nirmala Sitharaman in the Lok Sabha today. The Budget speech included the upcoming economic initiatives of the Centre for the new financial year. The 2023-24 budget document will be in paperless form.

Read here: Budget 2023: 47.8 crore Jan Dhan accounts opened so far: Finance minister

The Budget 2023-24 is PM Modi government’s last full budget before the Lok Sabha elections in 2024. The budget session commenced on January 31 with President Droupadi Murmu’s address. The Chief Economic Advisor Dr V Anantha Nageswaran presented the Economic Survey on Tuesday.

Here’s how you can access the document:

1. After the budget speech is over, the full text of the speech will be available on indiabudget.gov.in.

2. After opening the website, click on the Budget Speeches tab. Here you can also find previous year’s budget speeches.

3. There will be a new tab titled Budget 2023 added to this page.

Read here: PAN common ID for businesses: FM’s announcements on ease of doing biz

4. Once the tab is available, click on it and you will be directed to a new page where the download link would be available from where the budget can be downloaded in the PDF form.

5. The budget will also be available for the netizens on the ‘Union Budget Mobile App’ in English and Hindi.

6. You can also download the Union Budget mobile app from the website indiabudget.gov.in and from Google’s play store and iOS’ app store.

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Will the Budget boost consumption?

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The budget has pinned its hopes on boosting personal disposable incomes rather than personal incomes by offering relief to the lowest and highest income earners in the income tax bracket. This policy, as is the case for most economic policy objectives of the current government, has been in the making for the past few years.

Let us cut through the economic jargon of personal income versus personal disposable income. A lot of saving decisions in India, especially by income tax payees, have been the result of a nudge from the income tax regime, which has traditionally allowed deduction of such payments from the taxable income thereby bringing down tax liability. Such payments include premium for life insurance policies, most of which in reality are small savings plans and many other heads such as house rent deduction or interest payments on housing loans. Tax saving is, in fact, a major driver behind low-ticket house purchases in India.

Also Read: Will the Budget nudge growth?

When the government introduced the new tax regime in 2020, it offered significantly lower tax rates to income tax payers, provided they were willing to let go of the exemptions offered. This year’s budget has further lowered the tax rates in the new tax regime and announced that it will be the default regime for income tax payments. The only economic logic of such a policy will be that the government hopes that the amount not paid in taxes will now be spent by the taxpayers, thereby, giving a boost to private consumption.

By bringing down the marginal tax rate on the super-rich, the government is perhaps hoping to achieve two objectives. One, slow down the (not insignificant) exodus of the high net worth individuals to tax havens or low tax countries. And two, deploy the prime minister’s political capital to nudge the rich to spend more in the domestic economy. The Prime Minister’s appeals asking domestic tourists to spend on local artisanal products and the budget’s reiteration of this appeal as well as announcing tied capital grants to promote state-level artisanal malls are moves in this direction.

Also Read: The Budgetary maths, explained via three numbers

Will this plan work? The long-term impact of dropping the nudge towards forced savings to save taxes will not be insignificant. The positive impact on consumption spending could increase further if the government eventually drops the old-tax regime completely.

Is there a problem with this kind of a strategy to boost consumption? At one level, there is. Almost 40% of India’s Consumer Price Index (CPI) basket comprises of food items. This is basically a reflection of the fact that the average Indian household is still struggling to make ends meet and anyway spends most of its income. Only income growth can increase the consumption of this segment.

And at another level, there isn’t. As consumer products marketers will vouch, much of consumption is driven by the middle- and upper-classes.

And to be sure, the government’s answer to the criticism of the first part is that its formalisation push will increase incomes as well.


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