Media & Entertainment industry disappointed with the budget
The Union Budget is possibly the best budget that independent India has ever got. Ever since independence, no budget in recent memory or distant history has transferred this magnitude of financial resources to the states as this budget has done. Indeed a great one by Finance Minister, Arun Jaitley.
The television industry is one of the largest players in the market and the industry employs close to 1.2 million people with almost 50% of them being self employed. Taking a viewpoint from the broadcasters on the Union Budget, we at Adgully caught with some of them to know what they had to say.
Punit Goenka, MD & CEO, Zee Entertainment Enterprises Limited (ZEEL) said, “Indeed a futuristic and growth oriented Super Budget presented by Arun Jaitley! The Budget has certainly addressed the overall tax concerns and has portrayed a positive picture for the investors! It is certainly a Budget to remember for the Common Man, since it has remarkably addressed all the key aspects like housing, jobs & education! Congratulations Arun Jaitley for wonderfully addressing the nation's concerns through the Budget 2015 & for setting some key goals for 2022!”
Sudhanshu Vats, Chairman, CII National Committee on Media & Entertainment, and Group CEO, Viacom18 Media Pvt. Ltd. said, “Two words sum up the essence of Budget 2015: balance and clarity. Finance Minister Shri Arun Jaitley walked the tightrope by staying away from big bang announcements that might have strained the fiscal position, while taking substantial steps on matters of tax, social security and public investment (especially in Infrastructure). On the reduction in corporate tax rates to 25%, the 4-year implementation roadmap is a welcome addition. This is the clarity that the corporate sector needs so far as tax policy is concerned. While personal income tax slabs remain unchanged, higher exemptions are targeted towards savings and would add to retirement income in taxpayers’ wallets. 'Wallets' too will don a different connotation given the FM's vision for a cashless society. The clarity on corporate tax road map is a welcome development for investments in the Indian M&E sector.”
He added, “The reduction in withholding tax rates (to 10%) on royalty and FTS payments to non-residents has finally been granted. The increase in service tax is probably to bring the rate closer to the rates expected under the GST regime. In that context, the step is the proverbial bitter pill for our industry. I must compliment the FM for his announcement of social security schemes for the vulnerable sections of society as a vital cornerstone towards inclusive growth and development. All in all, this is a 'Make in India' budget that will truly 'Make India'.”
D D Purkayastha, Managing Director & CEO of ABP said, “The Budget is not pro reform and not investor friendly. It is pro simplification. Industry will be burdened by another round of service tax and cess. There is no hope for an Achha Din of economy. So we have to live with single digit ad revenue growth.”
R K Arora, CEO, News Nation said, “There is no benefit to media industry in fact by increasing service tax from 12% to 14% overall revenue will be effected adversely.”
KVS Seshasai, CEO Zee Learn Ltd, also operates Kidzee, Mount Litera Zee School and Mount Litera School International said, “The Union budget of 2015 seems to be a forward looking budget with education being one of the top priority areas for the government. The sector getting a total allocation of Rs.68,968 crore proves the importance it holds for our country. The higher budget allocation is welcome with an inclusion of almost the entire education sector ranging from Secondary Schools to Higher Education Institutions and Research centers. With the proposals of establishing institutions in different parts of the country, government aims to empower children and youth of the country with equal opportunities supported by an ease of reach. However, the budget has not really focused on creating incentives for Corporates who are participating in the education space to encourage them to bring in greater investments and drive higher Gross Enrolment Ratio (GER) and lower drop-out rates.”
He adds, “To accelerate the above, there is a pressing need for a collaborative effort between Private sector and the Government, to strengthen India's education system. Addressing this concern, proposals or initiatives in the budget which supported public-private partnership in the education sector would have worked better. There are no specific allocations towards teacher skill development and training which is critical for improving quality of education in schools. Also, we expected some incentives and ease of approvals for Corporates foraying in education through softer loans and step up repayment plans. Tax benefits to Corporates investing in research and development of content is another area where we expected some positive announcements but did not see anything on from the budget.”
Neither are there many benefits for television broadcasters nor are there many benefits for the Radio broadcasters. Vineet Singh Hukmani, MD & CEO, Radio said, “We were expecting the finance ministry to announce External Commercial Borrowing as also recommended by MIB to lower the cost of raising funds which would make fm radio players bullish on bidding in the auctions. It was not in the budget speech but we hope it will be allowed. Mr Jaitley needs to clarify the same.”
Though the budget is growth oriented, there were not many benefits to the media and entertainment industry. On the contrary, service tax was increased from 12% to 14% which will hugely affect the industry’s revenue. Broadcasters expressed disappointment and hence many of them refused to comment. By Archit Ambekar | Twitter: @aambarchit