The Union Budget which is to be announced on February 28, 2015 by Finance Minister Arun Jaitley is much anticipated and is expected to further give a push to growth. With inflation down to it’s lowest since the last few years and investment sentiment once again back on track, growth forecast for the Indian economy for 2014-15 is 7.4% from 6.9% in the previous fiscal according to data from Central Statistics Office (CSO).
One of the key things that marketers are looking at keenly is the taxation policies that the Union Budget will spell out. This includes lowering taxes on consumers as well as spelling out the details of the Goods and Service Tax (GST).
Ambareesh Murty, Co-founder and CEO of Pepperfry said, “I think the thing all of us are looking for is a further move on GST. I think that will help us, as an industry sell across all the states in India. It will bring a transparency to the overall system of tax collection and help us set up processes and system to serve customers with great value products. So, GST is something that we are definitely looking forward to.”
Similarly, Pravin Kulkarni, GM – Marketing, Parle Products says as far as the FMCG industry is concerned they are not expecting much from this budget except the GST. “If the GST comes into the picture maybe there will be some changes to the taxation and we are hoping that will bring down the total tax liability.”
While this is on the agenda of some marketers, there are some marketers who feel it will be something that lowers the interest burden for consumers which will encourage more discretionary spending.
“I think a good budget for marketer’s this year will be the one which reduces the interest burden on consumers and encourages them to spend and secondly it gives incentive to those sectors and segments which have been lagging behind and improving the sentiment and slow growth rates,” said Vivek Sharma, CMO, Pidilite. He further added, “Also, it would really help if the budget addresses the fundamentals of infrastructure and money. Because if they are addressed then the trickle-down effect in terms of consumer sentiment and spending is going to really help marketers grow the markets.”
Apart from taxation policies many other marketers feel that infrastructure development should be a key component of the Union Budget. Some marketers believe that the infrastructure in their sector needs to be improved in order for them to achieve higher growth during the next fiscal.
According to Sanjay Behl, CEO, Raymond they expect to see a well defined program on textile parks being set up in the country. “What we expect to see in this budget is clearly there is going to be a well defined program on textile parks in the country which will be a public-private partnership (PPP) kind of a framework to set up more industry and capacity. We as a country have benefitted hugely versus China over the last 4 or 5 years or even Bangladesh which is a lower cost sourcing for garmenting. India has become a more preferred destination for sourcing for the world, so we will be benefitted as a country if we exploit this opportunity to expand our PPP to grow in manufacturing in this country. The second critical thing we are going to see from the budget is fairly expansive skill development program in textile industry which is likely to come where there will be a government contribution along with the invitation for the private sector to come together and develop skills like tailoring, skills like garmenting, weaving, etc. which are easily transferable by private industry in cooperation with the government. We stay quite bullish on this budget,” he said.
From an automobile industry perspective Nitish Tipnis, Marketing Head, Hover Automotive India that they expect to see an improvement in the infrastructure in terms of more roads as well as rate cuts which will help push automotive sales. “From an automobile perspective, we see petrol cuts which necessarily are not a budget thing but a worldwide thing, but it is definitely going to boost the sales in cars. And more importantly than that is infrastructure. So the minister has also announced that every day we are going to add 30km of road being laid. That itself is going to be great impetus to the automobile industry. And with the rate cuts consumers are going to come back and spend more money rather than you put in that money in savings,” he said.
Recognising smaller industries and living up to promises
Some marketers also feel that other than making policies for their sector during the Union Budget should, just taking cognisance and giving recognition to smaller industries will take them a long way. This is so that they infuse growth with these industries and give further impetus to them.
G.K. Suresh, Head of Marketing, Foods Division, ITC says, “I think India is at a stage were food and food processing and packaged food is in a bit of a cusp. For example Aashirwad Atta has been a huge success story for us but the reality is that it is a very small portion of the total atta (flour) that is consumed in the country. And that would be true even if you look at a large category like biscuits or snacks and stuff like that. Therefore, if there is some recognition of the fact that the packaged food industry is doing a lot of good not only for the consumers but also harnessing the huge agricultural produce in the country and translating them into products of relevance convenience and excitement to the consumer and therefore if the Union Budget wants to take cognisance of that and encourage this industry to grow will have huge repercussion on the Indian economy and the whole consumption side of the economy.”
And finally marketers while being optimistic feel that the Union Budget should live up to the promises it makes or else it will fail.
Shubhrangshu Neogi, Director – Marketing & Brand, Religare says, “We are fairly hopeful about the budget. Obviously the government is doing a lot in terms of giving hands and legs to the economy. There have been a lot of promises but I think a lot remains to be done so I think this budget is going to be critical and we will see how that is going to be translating into reality. So we have been hearing about ‘Acche Din’ but will ‘Acche Din’ will translate into reality is yet to be seen in the budget. And how specific measures will be taken to channelize this pent up consumer demand into actual benefits is something that we want to see.”