Post Budget Reactions | Union Budget 2014, a boon for the economy!
Finally the long awaited Union Budget grabs all eyeballs and gives a sigh of relief to the Indian economy. We at Adgully have been seeking a wish-list from the industry stalwarts for a few days and now we have reactions from various sectors on the recently announced budget by the Finance Minister, Mr. Arun Jaitley.
Excerpts follow below:
Prasoon Joshi, Chairman CEO McCann Erickson India , Writer And Advertising legend said, “Growth oriented and Sensitive budget . It is a statement of intent that has realistically touched upon many important sectors and segments .The thrust on infrastructure and agriculture and manufacturing and rationalization of duties on input costs is welcome. From focus on rural electrification , Defence or aspects like Swachh Bharat ,protection of women , Beti bacaho Beti Padaho or allocations for the sports university and the artisans and the simple measures like Braille on the notes for the visually impaired reflect that the Govt has economic and social vision and credible intention even at a micro level. Of course there will always be more to ask for in terms of corporate or personal income tax and requirements for our specific industries but we need to see whether holistically the economy is being put on track and we moving responsibly and progressively in the direction of economic revival.”
Vani Davda, CEO, Tata Starbucks Limited said, “I am pleased to see the government’s focus on employability and skills development. Educating and vocational training for the youth to help their employability is crucial to harness the resource pool and will encourage their participation in the country’s growth. The introduction of the Young Leaders Program and the proposed national skill program – ‘Skill India’, are important steps to empower today’s youth with skills, improve employability and create jobs. This will indeed provide a boost to the retail and service sector which is so heavily dependent on people.”
“The hike in exemption limits will provide respite to consumers and in turn, boost their spending power. This is encouraging for the sector as it will help increase consumption and demand. I also welcome the government’s move to introduce Goods and Services Tax (GST) later this year,” Davda added.
Zafar Rais, CEO MindShift Interactive said, “Zafar Rais expresses, “Budget looks hopeful but also taxing, with the government investing in start-up funds (with Rs.10,000 crore set aside for VC funding), and investing in a centralized payment model for ease of use and elimination of third parties. With mobile phones becoming cheaper, the Smartphone usage shall witness an increase as well. Though, with service tax being added to the Online & Mobile Ads, Digital/ Web/ Social Media Agencies will surely face a negative impact.”
Pravin Shah, MD & CEO, Six Inches Communication pvt Ltd said, ''Union 2014 budget is going to affect digital advertising more than anything else. Government has got mobile and digital media spend under tax banner, clearly keeping in mind the growing popularity of these mediums, next year India is going to import significant number of android phones which surely means that ad spends will skew towards mobile phones as that’s the closest gadget a person carries all the time. We hope that this doe’s tax implication does not hamper the growing need to spend on mobile advertising. Ideally government could have waited for this medium to become more acceptable. On the other hand the Rs. 10K cr support for startup may help the ad agencies / creative agencies / digital agencies as startups require brand development and brand visibility".
Ramesh Poddar, Chairman and the MD of Siyaram Silk Mills feels that Prima facie this seems to be a good Budget under the current circumstances. It offers clear road-map on the path to be taken towards growth trajectory by giving thrust on infrastructural developments in the areas of Power, Roads, Industrial corridor, revamping of SEZs etc.
“It is also heartening to note that provision of investment allowance has been introduced i.e. 15% deduction of the investment made in the Plant and Machinery above Rs.25 Crore. This will boost the capital investment in various sectors and promote the employment and growth. Export entitlement on readymade garment exports has been increased from 3% to 5%. This shall incentivize exports. Also, duty on Textile & Readymade Garments has not been changed. Also, setting up of Textile clusters at 6 places will also help in improving the industry prospects. All these are good steps,” Poddar adds.
M.A. Tejani, Joint Managing Director, Gits Food Products Pvt. Ltd said, “The only direct impact on the packaged food industry in the budget is that, excise on specific packaging machinery has been reduced by 4 per cent. We welcome this move by the government. However, this reduction is not significant enough to make a genuine impact on the pricing. Other budget allocations in agriculture such as warehousing need to be implemented effectively to have a direct impact on the food industry.”
Monish Ghatalia, Founder, worldoo.com, said, “With India poised to become the second largest broadband market by 2016, the investment of Rs 100 crores on virtual classrooms and budget allocation to increase the internet connectivity across villages will surely open up more avenues for different age groups to use the internet. In addition, the drop in prices of personal computers will increase access and exposure at the grass root level. This would also increase opportunities for start-up companies like worldoo.com to build upon creating better infrastructure necessary to provide top quality experiences for children on the internet. Parents and educators will therefore be encouraged to take more initiative in communicating with children about responsible internet usage.”
J.J. Desai- CFO, Metro Shoes Ltd said, “We were expecting major reforms in the Budget, however may be due to limited time no significant announcement was made. There are some positives from the Budget and we expect more measures during the year. There is not much clarity on implementation of GST which is crucial for growth of economy. The Footwear industry was very hopeful about demand for more rationale excise duty of footwear, which would have provided impetus to the domestic manufacturing of Footwear and reduced imports. However the concession offered is mere as footwear up to MRP of Rs.500 is already exempt. We will continue our efforts to convince the government that excise duty of 26% on transaction value of Footwear is very high, substantially higher than standard rate of 12%.”
Madhavan Menon, Managing Director, Thomas Cook (India) Ltd said, “We truly applaud the Government’s delivery of its pro-tourism strategic vision via the Budget 2014 announcement of eVisas at 9 key airports- at once bringing Destination India into the spotlight, as also creating an immediate window of opportunity for the upcoming inbound season. The multiplier impact will empower allied businesses connect, both directly and indirectly with the tourism industry and we look forward to swift and effective implementation.”
Atul Hegde, CEO, Ignitee Digital said, “I do not think that the service tax implication will have an adverse impact on digital advertising budgets. Investments in digital advertising were not spurred by the lack of service tax, but rather by brand marketers recognizing the reach and impact online and digital media can potentially deliver. We expect that today’s digital savvy marketers will continue investing in the medium. The provisions by the government, on the other hand, reflect the exponential growth the sector has experienced over the last two years. It is a sign that online and mobile advertising are now being recognized at par with other media.”
Sandeep Gupta, CFO, B4U Channel, said, “The Budget seems to be a pre-reform budget, it apparently has nothing major for the Broadcasting Industry. With the overall growth in the economy there should be growth in the business. Specific positives which may be a boom for the media industry is that with the reduction of custom duty on the Television it would increase the TV owning households as more people may now buy Televisions. Also there would be more opportunity to exploit content with the push for broadband connectivity and power in the rural areas.”
Nimesh Shah, MD & CEO, ICICI Prudential AMC. Said, “One thing that stands out is the tax concessions for the middle-class that will mean more surplus funds in the hands of investors that can be channelized towards financial savings. The budget also does an admirable job of balancing the need for fiscal consolidation while providing impetus for sectors like infrastructure and manufacturing. There is an attempt to improve the business climate by streamlining procedures which should encourage investments. It also gives a sense of the long term direction on issues such as GST, DTC etc.”
Komal Ganotra, Director, Policy, Research and Advocacy, CRY – Child Rights and You said, “The Union Budget 2014-15, has on the overall, not laid much emphasis on social sectors, esp. children. Overall, the total allocation earmarked for children as proportion of Union Budget has declined marginally. In 2014-15, child budget stands at 4.52 percent compared to the figure of 4.56 percent in the previous year, with absolute amount increasing slightly from Rs. 72496.21 crore in 2013-14 (Revised Estimate) to Rs. 81075.26 crore in 2014-15 (Budget Estimate). Total child budget in 2014-15 stands at meagre 0.63 percent of GDP. However, given the child population of 42 percent (up to the age of 18) the allocation is far from encouraging. A few schemes only have referred to children, esp. girls, including “Beti Bachao, Beti Padhao Yojana” with an allocation of Rs. 100 crores, the modernization of madarsas, and the announcement on ensuring toilets and drinking water in girls’ schools. The proposed National Programme on Malnutrition is an encouraging sign and acknowledges the need for urgent action to improve the nutritional status of almost 50 percent of our child population.”
Ashit Kukian, President & COO, Radio City 91.1 FM, said, “We would have liked the government to take steps to increase the FDI limit to 49% from the current 26%. With Phase III auctions awaited, the increase in FDI limit would have opened the doors for fresh investment giving that much required boost to the radio industry.”
Shantanu Das Gupta, Vice President – Corporate Affairs & Strategy, Asia South, Whirlpool of India feels, “Considering that the new government has just taken over, we were not expecting any major announcements. Our desire that that the Excise Duty cut announced in the interim budget be extended was fulfilled last week. The Finance Minister has also addressed the issue of inverted duty structure prevailing in some industries, and hope that this will be extended to ours as well. The promise of providing 24X7 power is good news as non-availability of power is a deterrent to purchase an appliance. Finally, by imposing 3% Education Cess on imported products suggests that this government is serious about boosting manufacturing, which is very positive.”
Anil Chaudhry, Country President and Managing Director, Schneider Electric India, “Smart city lies at the heart of the Union Budget of the new government. The allocations and the measures announced now gives shape to the Mr Narendra Modi’s initial idea of 100 smart cities. The Government has made an allocation of Rs 7060 crore - an enabling factor that will boost the planning and development of the smart cities. And to compliment it, the Government has incisively identified 7 corridors. Overall, these are very promising preamble to the realization of the smart city concept. It now needs to be seen how the details are worked out by the Government.”
Sunil Duggal, Chief Executive Officer, Dabur India Ltd said, “The Union Budget 2014-15 was going to be a tough balancing act for Finance Minister Mr. Arun Jaitley, given the precarious state that the Economy was in. And he has managed it well. With a plethora of announcements, be it in the form of further opening up FDI, promoting investments in Infrastructure and Health Care or proposals for poverty alleviation and rural development, the Finance Minister has taken positive steps that would not just boost overall confidence, but also go a long way in generating employment.”
Duggal feels that his focus has been on empowering the Middle Class and particularly the emerging Middle Class, besides taking care of their health. The hike in Income-tax exemption limit and the Investment limit under Section 80C would provide much needed relief to the salary earners who are reeling under the impact of high inflation as it would surely put more money and more savings in the hands of the common man and fuel consumerism. It is also heartening to see that the new government is finally moving ahead with the introduction of the long-pending Goods & Services Tax (GST). GST -- which aims to replace a series of existing taxes such as excise duty, service tax and value added tax -- will go a long way in streamlining tax administration and result in higher tax collection for center and states. The government has announced its commitment towards introducing GST. According to independent estimates, it will provide a stimulus to the economy and could push economic growth up to 2%.
The government has reduced Excise Duty on machinery used in the manufacture of fruit juices and on packaging machinery from 10% to 6%. This is a positive step.
Kenichiro Yomura – President Nissan India Operations said, “The Budget 2014 presented today by the Honourable Finance Minister is based on fiscal prudence with a progressive outlook. We appreciate his considerations and his aim to achieve 7-8% GDP in 3 to 4 years. Structural reforms, including FDI liberalization in defense and insurance, initiatives to support local manufacturing and commitment to remove retrospective taxation, are significant steps from a larger macro-economic perspective.”
Hemant M Joshi, Partner, Deloitte Haskins & Sells LLP on Telecom, Media said, “Budget provides groundwork for digital India. The budget offers exciting opportunities to TMT sectors. GST roadmap,which states that GST will be implemented by end of year, would result in multiple layers of taxation and also avoid litigations. The budget encourages local manufacturing of electronics products.Although there are few negative aspects such as imposing 10% customs duty on specific telecom products and service tax on mobile and online advertising, overall the budget provides positive picture.
In the Telecom he feels, the budget provides growth opportunities to telecom sector to provide enabling infrastructure. Modernisation of cities and providing high speed connectivity to build smart cities will need roll out of new efficient technologies such as 4G and optic fibre deployment. The 24/7 power to all households, rural power infrastructure and emphasis on solar power will need sophisticated telecom infrastructure for building robust and reliable smart grids across the length and breadth of the country. Mobile banking and the vast business correspondent model of telecom operators will help in fulfilling the social objective of financial inclusion.
In the Technology, joshi said, “The emphasis on e-Governance, computerisation, e-Visas, FDI in e-Commerce, digital classrooms, etc. will enable in the making of digital India and offers opportunities to IT and software companies. In addition, budget provides support to new start-ups through technology development fund which will promote growth and proliferation of Indian technologies and in Media; The new TV and radio channels proposed for farmers, north east and rural communities will help to reduce the information and digital divide.”
Anirudh Dhoot, President, Consumer Electronics and Appliances Manufacturer Association (CEAMA) and Director, Videocon said, “The Finance Minister said that the Government would like to introduce Goods and Services Tax (GST) to streamline the tax administration, avoid harassment of business and provide stable and predictable taxation regime that will be investor friendly and spur growth. Consumer electronics and Appliances Manufacture Association looks forward to the speedy implementations of GST from the government. With the revision of the income tax exemption slab, the market will witness an upward movement in the consumer sentiments. We also believe that increase in Income Tax exemption limit by Rs 50,000 will also bring respite to the industry.”