Union Budget 2018: A Budget for Rural Poor, Farmer and Deserving class
The article comprises key reactions from Retail,FMCG and E-commerce segment.BY Shipra Srivastava | Feb 01, 2018 | comments ( 0 ) |
The Budget 2018 has continued to deliver on the Government’s stated development agenda of enhancing the rural economy and doubling the farmers income, supporting the poor and underprivileged, developing the infrastructure, promoting digital economy and prudent fiscal management. Speaking on same, Aashish Kasad, Partner and Consumer Products and Retail Sector Tax Leader, EY India, said, “ Further to incentivise manufacturers of apparel, footwear or leather products to boost the employment generation, the employment day criteria has been relaxed for availing the tax deduction. The corporate tax rate has been reduced to 25% for companies having turnover less than Rs 250 cr in FY 2016-17 which should benefit smaller organisations in ploughing back profits to grow the business further. To further promote the “Make in India” initiative, customs duty has been hiked on import of several consumer products such as sunglasses, perfumes and make up, shaving and after-shave preparations, fruit juices and vegetable juices, edible oils of vegetable origin, watches, toys, etc. The expectation of altering the income-tax slabs for individuals which would have generated higher demand through more disposable income in the hands of the consumer remains unaddressed. Overall, the budget has stayed the Government’s course of driving growth while trying to curtail the rise in fiscal deficit and inflation.”
Here are some key reasons from the industry...
Sanjay Sethi, CEO & Co-founder, ShopClues
"With a deep focus on the social sector, this year’s budget has ensured that India will be clocking a healthy growth rate. We are happy that, Finance Minister has given a boost to infrastructure spends and to the MSME sector. The MSME sector is the backbone of our economy and this boost by the government will ensure higher production and consumption.
With a focus on technology, the Finance Minister has provided great support to the digital industry. The government's decision to create 500,000 wifi hotspots in rural India will enable broadband access to those with no or little access to the realm of the internet. This will help grow the digital commerce industry and encourage more people to adopt cashless economy.”
Anant Goel, CEO and Co-founder, Milkbasket
“We welcome the government’s decision to reduce corporate tax to 25%, from a flat 35% earlier. This is a boon for the startup ecosystem and will help many MSMEs in doing business more efficiently. Budget’s focus on farmers’ welfare is appreciated and the end delivery segment will also benefit from this,”
Pankaj Vermani, Co- founder and CEO, Clovia
"With this budget, the Finance Minister has rolled out measures that will benefit agriculture, education, health, power, and women the most. With NITIAayog establishing a National Programme to direct efforts in the area of Artificial Intelligence towards national development is a good sign for technology startups. Also, government taking additional measures to strengthen environment for venture capitalists and angel investors is a good news for the startup economy. We look forward to more action on the proposed train-the-teacher initiative to improve education quality impacting the work force quality in the long term."
Jatin Ahuja, Founder and Managing Director, Big Boy Toyz
"The lowering of corporate tax to 25% from 30% comes as a welcome move for corporate corridors. The industries will now be charged to take up new financial goals with reduced tax burden".
Sharad Venkta- MD & CEO of Toonz Retail
The Financial Minister has remained focused on fiscal prudence even after announcing few popular measures like free health insurance and actions to increase farming income. FM has considered everyone starting from the bottom of the pyramid to the president of India, however, seems to have a forgotten person in between which is typical middle class. Almost no practical benefits for the typical service call which is the largest customer in the retail industry. Few of the actions like LTCG may be sentiment dampener.
In all this budget has missed a big opportunity post demonetization and GST to take steps to encourage consumptions.
Tanvi Johri, Co- founder and CEO Carmes
“This year’s Budget has taken positive measures to encourage startups and further strengthen the bid towards ‘Make in India’ initiative. We welcome the formation of 372 new business reforms targeted towards ease of doing business in a mammoth country like India. The announcements made in the healthcare sector sounds promising for women in rural India, which is a welcome sign.”
Sanjay Bhutani, Managing Director, Bausch and Lomb, India
“As for the direct tax proposals, the proposal to reduce the tax rate of 25% for Companies with revenues of Rs.250 crores is welcome as this is a step in direction to reduce direct tax rates to make this comparable to competing economies. That said, there is very little done in this budget to improve disposable income for the middle and salaried class. Overall, we would rate the budget as a mixed budget that aims to improve quality of life for weaker sections, however, increase in cess & introduction of Long Term Capital Gain would impact consumption.”
Sumit Joshi, Vice Chairman and Managing Director, Philips Lighting India
“We welcome the union budget’s strong focus on inclusive development, with allocations for enhancing both rural and urban infrastructure. It gives a big boost to rural infrastructure by ensuring electricity access to all rural households under the Saubhagya scheme. Additionally, the allocation of Rs 2.04 Lakh crores for developing smart cities will go a long way in creating world class urban infrastructure” said Sumit Joshi, Vice Chairman and Managing Director, Philips Lighting India.
Ullas Kamath, Joint Managing Director, Jyothy Laboratories Limited
“The Finance Minister has presented a very realistic budget with focus on critical areas like agriculture, health, job creation and skill development. We expect rural demand to pick up as disposable income goes up following slew of measure.
Bringing the corporate tax rate down to 25% from 30% for companies having a turnover of Rs 250 crore or below is definitely encouraging move for SMEs and MSMEs. Besides proposal to launch National Health Insurance scheme is also a good move.
With India’s equity market still at the nascent stage in terms of retail participation, the introduction of long term capital gains may become a hindrance for new participants. Overall, we believe it’s a well rounded and a forward looking budget with key focus on economy growth drivers and job creation.”
C K Ranganathan, Chairman & Managing Director, CavinKare Pvt Ltd
“The introduction of long term capital gains tax at 10% is not only warranted but is essential to address the gap between the manufacturing / trading and financial market activities. Similarly, reduction of corporate tax to 25% for the MSMEs with turnover of up to Rs.250 crores who make about 99% of total tax paying entities is a decision in right perspective. However, the salaries individuals are left high and dry without much to drive home.
The enormous funds pumped by the government in enhancing road / rail & aviation related asset building, coupled with funding the new MSMSs by way of Mudra yojana would become pillars of job creation and earnings in the un-organized sector.”
Ramesh Nair, CEO & Country Head, JLL India
It is no doubt that the continuation of tax reforms like invent of GST, online assessment of income tax, restrictions imposed on cash transactions, invent of Aadhar like unique identification for business entities, encouraging digital transactions towards a less cash economy will all result in a transformative reform for the country.
The focus on ‘Ease of Living’ that was the running theme for the union budget has tried to raise the per capita income specially for the rural and semi urban population. This will allow more spend boosting retail, especially the expenses made per capita on FMCG products. The budget has a long- term focus on empowering people in various categories which will have raving impact on the FMCG.
Parliament to Pass Union
Budgetary exercise this time will be fast-tracked to ensure that the Finance Bill 2014-15 is passed