Budget 2020: Advertising industry seeks growth-oriented budget

In the backdrop of the economic slowdown, advertising industry leaders share their expectations from the Union Budget to be presented this week by Finance Minister Nirmala Sitharaman

e4m by exchange4media Staff
Updated: Jan 31, 2020 6:50 AM


Union Budget 2020

This is perhaps the most important budget for the Narendra Modi government. Despite several steps taken by the government to boost consumer sentiment, the signs have not been too encouraging for the economy. Therefore all eyes will be on Finance Minister Nirmala Sitharaman, who will present her second budget on February 1.

Pre-budget expectations are high across sectors. The advertising industry for one has been feeling the pinch of marketing budget cuts and are hoping that the FM will present a growth-oriented budget which will help revive confidence. 

According to Ashish Bhasin, CEO, APAC and Chairman, India - Dentsu Aegis Network, “I have great expectations from this budget and that it will spur growth. Now, if the budget spurs growth, advertising will automatically benefit. Afterall, advertising is only a lag and a lead indicator of economic growth.

“As a rule of thumb, advertising tends to grow at 1.5 times the GDP growth. For instance, if GDP is growing at 6 per cent then advertising should grow at around 9 per cent. Hence, if more money is put into the pockets of the common man, if consumption is given a boost, it would inevitably profit the advertising industry.

“Simplification of taxes, rationalisation of taxes and cesses - particularly in the case of personal taxes, is going to be a very welcome step and most people are expecting that.

“The advertising industry does not mind paying its fair share of taxes. Nevertheless, the complexity, the time and the harassment involved in the process, as well as awaiting refunds for years, is something that is really crippling this industry. I expect that the Finance Minister would be looking at addressing these issues.

“For the long-term, sustained growth, employment opportunities must be created. Digital is going to play a big role in this going forward. I hope to see measures that benefit the more rapid digitization of industry.

“Investments in infrastructure are required for the next decade or so in India. We have seen this government taking steps in that direction and I hope to see many more announced.

“In short, I am expecting a growth-oriented budget because we have the potential to grow between 8-9 per cent but are languishing at around 5 to 6 per cent. If the obstacles and shackles of the bureaucratic mindset are removed and steps taken to drive consumption and free up capital, I am pretty sure that very soon India will be heading towards a much higher GDP growth.”

According to Anand Bhadkamkar, CEO, Dentsu Aegis Network (DAN) India, "Expectations from any budget is always to seek an impetus for growth and the current government’s actions over the past six months do show that it is trying its best to induce that growth. I am expecting the budget to be more people-friendly, sternly growth-oriented and decisively focused on investments into infrastructure and developments. I also expect to see a lot more push for Make in India initiatives, thereby providing stimulus to the manufacturing sector and thus, creating growth opportunities for MSMEs – perhaps through Tax Holidays and/or beneficial taxations.

"As far as advertising is concerned, it’s a prerequisite that consumer sentiments move north. Advertising leads the way when the economy starts growing. Consequently, I hope the upcoming budget provides better personal taxation benefits which, in turn, should help bring in more cash into the taxpayers’ hands, leading to an increase in their ability to spend. Industries such as FMCG, automotive, e-commerce and BFSI are key contributors to advertising spends and I expect these categories to benefit from the impending budget.

"At present, we need this growth stimulus and an upward direction from the forthcoming budget. I expect simplification on the tax compliance requirements with further digitization and transparency in the functioning of the tax department. This budget must offer an opportunity to send across the right message. It must generate a strong belief in India’s growth aspirations and drive further investments across the country." 

Putting forward an optimistic viewpoint of the India story, Suveer Bajaj, Co-founder, FoxyMoron shares, "India has a largely bullish forecast over the next decade or so with a promise to grow the economy with key sectors growing both domestically as well with a host of international players knocking on our doors with black briefcases. The sentiment around India has been largely good with advertising, content, digital and e-commerce, all expected to see big upswings in the mid-term.

 Brand India has done well for itself over the last few years by making a lot of the right moves. A few dark clouds that overhang, loom precariously and threaten the general sentiment and therefore spending. If we can continue to extend our Indian hospitality to our friends from around the world and rid ourselves of some large rain clouds, the economy and therefore the industry will quickly regain the much-needed steam it has been promising. Digital payments, while still at 3 per cent of all domestic transactions, have been making a serious case for the boom of digital commerce. There is and has been constant hope that a new day may shine light on a new point of view on digital currencies. Markets favour the brave and in advertising, we are nothing if we are not brave."

 Underling how the a key ask from Budget 2020 would be to find ways to kick start the economy, Hareesh Tibrewala, Joint CEO, Mirum India says, “If I have to list two specific areas for the government to address, the first would be put more money into the pocket of the consumer, that spurs spending and secondly to bring confidence back into our financial institutions and the fiscal system.

 Stressing on the need to boost consumer sentiment, Shrenik Gandhi, Chief Executive Officer and Co-Founder, White Rivers Media, says, "India maintained its tag of being the world’s fastest-growing economy, despite grim global projections in 2019 as per IMF, which also projected India’s growth rate at 7 per cent in 2020. This bears testimony to its potential of spearheading global economic growth. Budget 2020 is therefore Sitharaman’s opportunity to make a difference not only to Indian but also the global economy. One of the key accelerators to this will be enhancing the net disposable income, which is directly proportional to the income tax cuts, affecting the demand for goods and services, finally snowballing into economic growth or slowdown. Budget 2020 should, therefore, focus on expenditure boost by lowering the personal tax rates, leading to higher savings to pump the economy."

 The common expectation from this Budget, explains Bharat Khatri, Country Head Xaxis India, is one that triggers growth. He says, “I sincerely believe that this Budget will trigger credit growth that results in industrial activity, which in turn is expected to trigger consumption growth. Anything that drives GDP growth, drives advertising growth even more. So, the new budget needs to be growth-oriented and needs to put more money in the pockets of the rural and urban consumers to boost spending.

 While the Finance Minister did reduce corporate tax, there is a pressing need to rationalise GST in advertising as 18 per cent is very high. The process and procedures need to be simplified as they are cumbersome, unproductive and waste a lot of time.

 I am also optimistic that we will see a renewed focus on growing digital infrastructure and smart cities with more Wi-Fi connection points, making it possible to bring new users and customers to Indian companies.”

 Reiterating how advertising thrives on the growth in other business, Harikrishnan Pillai, CEO & Co-Founder, TheSmallBigIdea, puts forward his expectations, Sectors like FMCG and Auto have had a strenuous time lately and some relief their way would bring a positive blip across. A more transparent and simplified tax regime, especially while dealing with digital platforms with their HOs outside of the country. Efforts to digitise Bharat should be a core focus with incentives being made available to entities driving change here. There is a likelihood of increase in the price of data which would be detrimental to the entire ideology of digitisation. The effort to make free data available or subsidy especially for education and healthcare sector will be a great boost for these categories. The effort to educate youngsters on digital will prepare the economy to fill the talent gap.”

 Emphasising the need for definitive policy changes, Sabyasachi Mitter, Founder and Managing Director, Fulcro says, “The reality is that the economy has seen a significant slowdown in the last two quarters and this is fuelled by poor corporate sentiments as well as a poor consumer demand. The need of the hour is to make definitive policy changes that are business friendly and improves ease of doing business. Currently, the aggressive implementation of GST has locked significant cash flows to the tune of over Rs 40,000 crore. Some measure like LTCG needs a revisit to shore up sentiments. There is a definite need to increase cash in the hand of consumers to spur demand and the government should go for a pro-growth budget within the limitations of the fiscal deficit."

 Summing up how the year 2019 was a roller coaster ride for brands at large with various new trends in advertising and marketing strategies emerging, Sameer Makani, Co-founder and Managing Director, Makani Creatives, shares, “The sector expects the budget to revive the overall economy at large. The ad industry is expected to grow by 10 per cent to 12 per cent in 2020 and this budget should be an enabler infusing the required growth. Few direct reforms such as changing the GST collections to quarterly for companies below Rs 1 crore, and sector-specific boosters to ensure higher consumption while creating a huge demand will help in providing an impetus to the economy. We are also expecting a reduction in the personal taxation and Income Tax which will help ease the pressure across levels of population.”

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