Mumbai: Finance minister Nirmala Sitharaman will be unveiling the Union Budget for FY 2023 – 24 in the coming week, and everybody has their eyes fixed and hopes pinned on the same.
Indiantelevision.com spoke to ad industry troupers who spilled the beans about what’s on their minds with regard to their expectations from this year’s union budget. While most pointed to tax exemption and relief, some discussed foreign investment, incentives and efforts on digitisation as their anticipations.
Let’s have a look at what they have to say:
GroupM president – investments, trading & patnerships Ashwin Padmanabhan
The Indian economy is growing at 6-6.5 per cent – we are still the fastest-growing economy. I just feel that in some way, we need to catalyse foreign investment in the country. That investment should catalyse new businesses, agencies and technologies that will drive the advertising industry at large. The growth that we are seeing in the economy is not necessarily in terms of the advertising industry – the advertising industry is actually lagging. Any policy which encourages investments, tech and foreign investments into new technologies, consumer technologies – I think that should also catalyse advertising spending. So, I would say it is more of a macro expectation rather than an expectation for the advertising industry specifically.
With more money in the hands of the consumer, purchasing power will definitely help. But I do feel that where we are today, we are a strong consumer economy – so we are not seeing low demand, or stress from that perspective. If there is more money in the hands of the consumer, it will obviously be one more catalyst to drive spends, and from that perspective, it will help the advertising and entertainment industry. But I think more of macro-economic and fundamental reasons to correct a lot of what has happened in terms of the lack of investment and funding. In a way, it’s wiped out a lot of the new tech. Any encouragement that happens for re-investment back into new tech, I think would be a big factor.
DDB Mudra Group chief financial officer & chief operating officer Anurag Bansal
The budget for 2023 is likely to be populist as it is coming ahead of the election year. The expectation is to offer waivers, relaxations and rationalization of taxes. The salaried class forms a bulk of the service industry including advertising and marketing. The post-pandemic unchecked price rise across the economy has caused serious dents in the pockets of most employees at the middle and lower levels. The government should offer relief to the salaried class by increasing standard deductions, tax slabs and limits under 80C. It will help increase disposable income and restore buying power.
Brand guru, and Samsika Marketing Consultants founder chairman & managing director Jagdeep Kapoor
The brand marketing and advertising industry has helped grow the economy by helping move unorganized, commoditised products and services to branded, organised, trusted products and services. This industry needs to be encouraged to grow the economy further and to help Indian consumers choose brands as per their needs, desires and wishes. The industry does the job of educating consumers, mutual funds growth being a case in point. The expectations are threefold. Treat the industry as an investment source rather than an expenditure avenue. Just like other industries are incentivized, so should this industry.
Secondly, taxation benefits and relief would help.
Thirdly, recognition would help the advertisers too, because just like an investment in manufacturing and signing of MOUs is highlighted, so also should be an investment in brand marketing and advertising along with monetary reliefs and rewards.
Cut The Crap founder & creative head Jagdish Acharya
We have done relatively well to come out of the pandemic without losing much momentum. Now is the time to boost both sentiment and consumption. While tax reliefs are a no-brainer, I would look forward to radical steps towards providing cheap insurance coverage to the masses thereby reducing the anxiety to save endlessly for the future and providing motivation to spend for a better quality of life.
On closer grounds, I hope to see incentives - lower service tax for example - on lower advertising spends, to help smaller and local brands. I also hope to see economic stimulants and fillips for boutique ad agencies, recognising them on par with the more fancied start-ups in the service industry
We are already on board a speeding technology and digital juggernaut. The need of the hour is to provide cyber safety to the common man, curb the industry’s ‘jugaad’ culture to collect and use personal data, incentivise real value, not a blind valuation and instil trust. Hope the budget helps in creating a clean and productive digital ecosystem.
Bang In The Middle (BITM) co-founder & managing partner Naresh Gupta
2023 will be a tough year for consumer markets with challenges on the demand side and pressure from global sentiments. It will be nice if there is a concentrated effort from the budget to let people have more money in their wallets. I would love to see a change in tax structure more from indirect taxes than from direct. I would expect to see a push from the budget for people to start considering EV cars. Travel is on the rise and a budgetary push for personal tourism will be welcome.
Kinnect CEO Rohan Mehta
The government should reduce the tax burden on the lower-income group – this would result in more disposable income, which is required in the current inflation period. They should speed up the infra development projects – for India to achieve a five trillion economy and to counter China in terms of attracting manufacturing infra is critical. We should also have ease of doing business. Along with infra, we need to work more towards ease of business to help start-up's ecosystem and foreign investment into India. Digital economy – India has fast adopted a digital payment system during the pandemic, and the government needs to continue with its effort on digitisation.
RD&X Network co-founder Ashish Bhasin
Advertising benefits the most if the economy grows and if India’s GDP grows, as a rule of thumb, advertising grows at 1.5 times the rate of GDP. All steps that benefit growth in the economy, therefore, would be welcome, particularly steps that benefit the rural economy because large advertising sectors like FMCG depend significantly on the rural economy.
Secondly, digital, which has shown a lot of thrust recently, has huge potential. Incentives around making India the resource centre of the world for digital communication would help not just startups but also established businesses. Look at what happened with IT when incentives were given and infrastructure was provided. This growth that IT saw can be replicated in digital in the advertising and media industry also. But you need proper support, proper representation in foreign countries. When I say that infrastructure is needed I do not mean hard, physical infrastructure but an enabling infrastructure.
The third thing is the ease of doing business. Advertising does not mind the taxes being paid. It is the hassles around that and the complexity which is an issue. The more it is simplified the more time can be spent on running the business. The fourth point is much like there are incentives for spending in R&D there should be tax incentives for advertising to encourage clients to advertise. This will spur economic growth.
For example, if someone spends Rs 100 on R&D benefits are there in the form of higher tax deductibles. Similarly, money allocated for long-term advertising should see a tax benefit, because it is an investment in building brands, not just an expenditure. This gives reasons for clients to advertise more which in turn will spur demand and the economy even more. The last point is that taxation, especially surcharges have driven the personal tax rates to very high levels making India uncompetitive. This will make it difficult to attract global talent.
Surcharges were meant to be one-offs. They were supposed to have been for a short period of time. But they have continued to stay on and on. It would be good if the tax rates remain what they are but the surcharges be removed, so at the higher income level the effective personal income tax rate gets rationalised and the brain drain is reversed. I do not think that the exemption rate will go to five lakh rupees but any relief there is welcome. The more money that is put in the pockets of the consumers the more likely it is that they will spend. That will help the economy. Growth is needed in a year like this where dark clouds of recession are present in developed economies. If we are to avoid this impact then we have to do everything possible to spur growth. One good way is to put more money in the pockets of the consumer.
If you approach the government in the right manner they do listen. AAAI during COVID had written a letter to the government on several items. One of them was to pay up on time for the government's advertising. Things improved since then and this helped smaller agencies tide over that difficult time. If you represent your case it is listened to. But at the same time, you have to remember that the Government does have many priorities to balance like food, medicine, education, and infrastructure. They have to balance it out. They have to see where the need is the highest and thus, prioritise.
Overall I feel that this will be a growth-oriented budget with particular emphasis on rural and on infrastructure building.
Social Panga co-founder Gaurav Arora
Global markets like Europe have already started showing signs of a recession. The IMF forecasts global growth to slow from 3.2 per cent in 2022 to 2.7 per cent in 2023. This comes after a 6 per cent forecast in 2021, making this a cause of concern. However, despite global markets facing substantial challenges, South Asian and Indian markets, in particular, look like they will continue to boom. India overtook the UK to become the fifth-largest economy in the world in 2022 and shows favourable conditions as it strengthens its focus on hyper-local businesses, e-commerce and technology, to lead the way into 2023.
I believe that the government’s financial investment in Indian businesses will extend into 2023 with the Union Budget 2023. This will allow growth to happen locally and expand globally. Regulations in the startup ecosystem will also help this steadily developing sector take a step in the right direction. 2022 was a good year for startups, with companies like XpressBees, LivSpace, Tata 1mg and Darwinbox achieving unicorn status. To take our startups to the next level, a sustainable growth model from the government will be required well into this financial year too.
In my opinion, the fiscal policies this year must also focus on India’s booming growth in the digital infrastructure space. The biggest example of our digital adoption can be found in the form of UPI even in the smallest kirana stores. More financial backing can be expected in the e-commerce and D2C markets in India to ensure its expansion into the rural economy. This, I believe, will be led by the government-driven Open Network for Digital Commerce. Regulations in the way businesses are run, as well as an increase in capital infrastructure in the digital ecosystem, should be a big topic of discussion in the Union Budget 2023.
