Industry’s expectation from union budget 2020

Industry’s expectation from union budget 2020

Should focus on expenditure boost by lowering tax rates

Budget 2020

MUMBAI: Amid ongoing economic tension in the country, finance Minister Nirmala Sitharaman is all set to present her second Union Budget on 1 February 2020.

It is expected that Budget 2020-21 will put the economy back on track. One of the biggest challenges before the Modi government is to have a plan of action to combat the decreasing growth rate of the country. As the nation waits for the announcements, we spoke to industry experts, strategists and financial experts to know what they expect from the union budget.

Although there won’t be any direct impact of union budget on the television industry, the economic boost in other sectors like FMCG, automobiles, retail, etc., could add to the pocket of consumers to spend more and lead to more advertising. Experts are expecting some kind of relief in these sectors so that there could be better ad growth.

Apart from this, experts are also expecting some reduction in GST on cable and internet bill. Currently, 18 per cent GST is added on cable and internet bill and industry wants that to be brought down to 5 per cent.

Read what people have to say:

Maharashtra Cable Operators Federation president Arvind Ramesh Prabhoo 

“We are expecting a reduction in the GST that is being levied on cable television because under the new NTO what we have seen is that the rates have not decreased which was envisaged by TRAI. According to the new NTO, they are expecting the cable operators and the DPOs to give a discount of 60 percent to the second television set but nowhere has the government said we will reduce the GST. We have been stating this now for a very long time that the GST should be reduced from 18 percent to 5 percent. Also what we are expecting is that on the goods of cable television and equipments of fiber to the home (FTTH)  if it is imported there should be a duty deduction or if it is being manufactured in India then there should be a reduction in GST for at least five years. So overall on the entire equipment required for fiber to the home to be incentivised there should be less taxation.”

Zee Media Corporation Limited former managing director Ashok Venkatramani

“The biggest worry for everyone is whether the government will use this opportunity to seek some of the issues in the Indian economy so that business starts picking up. The overall industry is feeling the effects of economic slowdown because people are not spending. So it is not what the budget does for the television industry as much as it does for the overall economy to bring income flow. I am not expecting a huge structural change in the media industry because the largest part of our issues is governed by TRAI. However, television industry will gain a lot mainly when the revenue starts pumping in and for that to happen we will have to look at how consumption grew, whether it is FMCG or retail and for that. If government could do something to put more money in the pocket of average Indian to spend the consumption will grow up and automatically brands will start advertising more.”

UCN Cable Network head  of operations Debashis Mohanty 

“We need GST to be 5 per cent flat. Apart from the GST, I don’t think so there is going to be an exemption in NTO and NTO 2.0. The industry is in a dilemma as the changes proposed in NTO and NTO 2 have not been implemented yet.”

SBICAP securities head of institutional equity research Rajiv Sharma

“I don’t think so there is going to be any direct announcement because you have separate regulators and separate policies for it but what has happened is any cut in income tax or any measures to boost the economy will have a positive impact on the ad growth which has taken a toll in the last 18 months. Any measure to boost tourism or give any announcements on the film making side if possible will result in a lot of employment directly and indirectly. Any policy that could bring down the cost of production of films or some relaxation to shoot outdoors will help in revenue generation. Beyond this I am not expecting anything from the media industry perspective.”

GTPL Hathway  vice president Yatin Gupta

Hope that government sometime soon should cut down GST on the cable industry. There should be relaxation in customs which impacts our industry.

Elara Capital vice president- research analyst media Karan Taurani

"The economy is already in a dry state, there are no major expectations from the budget as such. However, for the television industry, there could be some financial stimulus that can boost the consumer derivative. There is also the expectation in the GST cut as FMCG market place almost 35 percent of the overall aspect of the entire pie and for TV it is around 55 per cent which is quite a sizeable number. So, there should be some kind of relief for the FMCG sector that can lead to better sales growth and then it could turn into a better advertisement growth. This year FMCG TV advertising has been low on the television portion. There is a contribution of nearly 50 percent from the FMCG vertical so some kind of a revival there will lead to better ad growth. Because next year industry ad growth is expected to rise by 8 per cent for the TV industry so if some funds are diverted towards that segment, certain relaxation or some GST cut will certainly help. Rural demand is taking a major hit; it has seen a sharper volume decline as compared to urban decline. So some kind of measures to bring rural demand on track will have a big impact on advertisement growth.”

Enterr10 Television co-promoter Fakt Marathi Shirish Pattanshetty 

“If there is q deduction in the personal income tax maybe there should be additional flow in the market in terms of improving business. It might help FMCG companies and other companies to start spending on advertising which will help the industry to get out of the current scenario. While there is the discussion on NTO and NTO 2.0 what government can look at is how they can reduce the 18 per cent GST in the base price of Rs 130 to get it to 5 percent of tax. So, that while we are working so hard to get the consumer pricing down why not the GST pricing also should be reduced on cable and DTH base subscription. On the free channels, they are welcomed to charge 18 per cent but at least at the base price if they can amend anything it might help the cable industry. Also, I believe corporate taxes have already been reduced as a boost but none of the companies are using the corporate tax reduction for outflows. They are using this tax benefit to be more profitable so that they can get a better dividend. The ultimate solution could be the reduction in personal income tax which might help the end-user to use the additional funds for consumption purposes.”

Madison media vice president Vandana Ramkrishna

“My expectation from the union budget 2020 will be being dynamic reforms to increase consumption and drive demand. Simplify and liberalise laws that help companies source international funding. Also, educational tax benefits need to be enhanced so that the country is able to upskill. Over and above this rationalisation in GST for electronic media is something that has been in the ask for a while.”

White Rivers Media chief executive officer and co-founder Shrenik Gandhi

"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."

Alchemy Group CEO Karan Gupta

"With Modi government 2.0 we hope to see support for Digital 2.0, after significant growth in digital penetration and digital literacy in the country, it's now time for the government to focus more on Tier 2/3 and rural sectors. From more internet penetration to better IT Infra and connectivity empowering the new consumer with content and commerce across categories. Working towards a Digital India dream we hope to see some support for digital-first businesses and other ones that are focused on making the life a consumer more convenient and fulfilled no matter where they are based."

Digitalabs CMO Agam Chaudhary

“It’s a near ritual for every industry to expect measures for monetary relief from the annual budget. However this year I’d want to make an exception and expect measures that revive the economy as a whole. Our revenues are tied with both demand and supply ends of consumption. If they have robust growth, so shall we.”

Pixel Pictures  founder and CEO Prashanti Malisetti

"Production industry is a labor-intensive field. The entrance of OTT platforms like Netflix and Amazon Prime have changed this industry drastically. We have an opportunity to create new forms of content and explore new genres. It would help to have some incentives to create a different kind of awareness content. The consumption of video content is increasing at a rapid rate and we need to encourage more talent in this industry. Incentives to film schools and students of visual arts would be encouraging."