The digital initiatives of the government have impressed everyone in the consumer business companies. The push to the farmers and agriculture economy has also been welcomed since the whole effort to bring parity in the economy is visible.
Relaxation in the income tax brackets of the individuals was something that the industry feels, remained unaddressed. However, the 25% corporate tax on business with turnover less than Rs 250 crore is expected to help the MSME segment in a big way. Changes in insurance, service tax and excise were welcomed by the industry.
Some reactions from various brand custodians:
Varun Berry, Managing Director, Britannia Industries
The budget is focused on infrastructure & rural development and large scale employment generation. This provides a springboard to spur consumption and lead to faster growths across sectors.
While overall expenditure is projected to grow at 10% during the year, development related spending is expected to grow faster at 13-14% with spends on affordable housing growing at 30% and on railways at 22%. These spends could generate large scale employment which could thereby lead to a healthy and sustained consumer economy.
Simplification of the entire gamut of indirect taxes with the implementation of GST appears to have lightened the entire budget process significantly.
The reduction of corporate tax rate from 30% to 25% will have a positive impact on the growth trajectory of industry, though Companies contributing 90% of tax collection are still waiting for their share of relief.
It is interesting to note that the government’s resolve to improve tax compliance is bearing fruit. For the first time Personal Income Tax collection (at 3.3% of GDP) is expected to be more than Corporate Income Tax (at 2.8% of GDP).
While Long Term Capital Gain Tax could have a marginally negative impact on stock markets, the levy was expected and is not seen as being unfair.
A note of caution could be that while MSP increase would improve farmers’ earnings, it may lead to unintended inflation if it is not carefully managed.
Overall, it’s been a fine balance of long term measures, reasonably tight fiscal deficit without significant tax levies. We see this as a pro – growth budget.
Bhavish Aggarwal, Co-founder and CEO, Ola
The budget is progressive, balanced and forward looking with a well-defined focus on Digital India. Ola is already a partner to some of the Digital India initiatives. Allocation of Rs3,073 crore towards Digital India is a significant leg-up. The thrust provided to tourism with the commitment of creating iconic tourist spots, investment earmarked for transport infrastructure, progress made on Smart Cities and creation of more than 5 lakh wi-fi hotspots in India is truly welcome. Overall, it is a balanced budget which will further strengthen India’s position as a leading world economy with good liveability index and business environment.
Amit Gujral, Chief Marketing Officer, LG Electronics, India
The Budget undoubtedly is a ‘people’s budget’, favouring the rural populace, which is the backbone of the Indian economy. The focus on transforming India into a Digital power with its roots in promoting innovation ecosystems, smart technology, robotics, IoT and artificial intelligence is commendable. It is good to see that there has been a significant push to boost the ‘Make in India’ initiative. Our heartiest congratulations to the Government for focusing on healthcare, infrastructural development and further investing in Swacchh Bharat Mission.
Kishalay Ray, President, Consumer Electronics Division, Sharp Business System
Overall, the entire Budget was wonderfully balanced. However, air pollution has caught the eye of the Budget for the FY 18-19, as it was a major reason of concern in the year gone by. This has definitely proved how much attention and support is required on this issue. Air contamination became a major concern due to the rapidly rising health and respiratory problems it caused. Balancing populism with progress, our Financial Minister also touched upon some areas like rural with ultra-modern smart cities, ecology and environment with industry and commerce.
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 crore for developing smart cities will go a long way in creating world class urban infrastructure.
Karni S Arha, Chief Financial Officer, Aviva India
The National Health Scheme of the government is a great initiative and will act as a catalyst in elevating the insurance sector and in turn the health care services for the uninsured and underinsured population. Also overall health insurance deductions increasing to 50k and increase in exemption limit from Rs 10k to Rs 50k for senior citizens is a big positive move to promote health care and safety among the most deserving.
Provisions announced in the Budget for the MSME sector in terms of lower corporate tax rate at 25% would support their growth and create job opportunities. In overview, the budget is positive with an overall theme of supporting the farm sector & MSME business, which would generate growth in the overall economy. Aviva’s two critical business objectives are delivering best healthcare products (like Aviva Heart Care) and providing best insurance care to the MSME sector where we partnered with CII. Thus we feel very confident about the budget announcements and would like to partner with various parties in delivering the best in class insurance plans.
Antony Jacob, CEO, Apollo Munich Health Insurance
The world's largest government funded healthcare programme, National Healthcare Protection Scheme (NHPS), with approximately 500 million beneficiaries, an insurance scheme of up to Rs five lakh per family per year for secondary and tertiary care hospitalisation is a welcome move not just to maintain a healthy India but this I believe will also create several lakh/s new jobs in the country as new healthcare facilities will come up in smaller districts and villages. This move will go a long way in empowering India's poor and underprivileged.
Albinder Dhindsa, Co-Founder and CEO, Grofers
This year’s Union Budget laid a strong focus on inclusive development and sustained economic growth. The measures introduced to bolster fields such as agriculture, infrastructure, MSMEs, youth and rural economy are commendable. The growth focus around ease of living is laudable and we are hopeful that this will anchor the future growth of the Indian economy and its citizens.
The measures announced today to benefit the farmer community and boost the agriculture sector will be instrumental in maximising farmers’ incomes while reducing waste and inefficiencies that contribute to inflation. It is heartening to see the Government’s continued focus on education and digital connectivity to aid India’s transformation to become a digitally empowered, knowledge economy. The initiatives will bolster the growth and success of MSM.
Nikhil Aggarwal, CEO, Campus Footwear
"We welcome the increase in custom duty from 10% to 20% on footwear industry, a great move to boost “Make in India” by the finance minister and we congratulate him for the same. Also the 2600 crore allocation to the leather and footwear industry, will auger well for job creation in the country. Budget 2018 has a lot for the 40% of the agricultural and rural population base, the national health cover and MSP is a fantastic step, which would result in generation of disposable income and inclusive growth for years to come."
Sanjana Desai, Head of Business Development, Desai Brother’s Ltd (Food Division – Mother’s Recipe)
The Union Budget 2018-19 is largely positive for FMCG. As anticipated by the FMCG sector, Government’s thrust on boosting the rural economy is welcoming. Increased allocation under various schemes such as MNERGA, rural infrastructure and others will not only increase rural income through employment generation by these projects but will also improve connectivity giving a boost to rural/agri businesses. Furthermore, doubling the investment in food processing to Rs. 1400 crore will which is growing at an average rate of 8% per annum is a great move and will promote establishment of specialized agro-processing financial institutions in this sector. Additional allocation of Rs. 500 crore to launch Operation Greens will promote Farmer Producers Organizations (FPOs), agri-logistics, processing facilities and professional management to provide basic vegetables to consumers all throughout the year. Apart from this, government’s focus on organic agriculture is definitely in support of the health & wellness industry.
Result of these measures will witness increase in rural consumption, improve overall rural economy and have a trickling effect on the corporates.
Sanjay Bhutani, Managing Director, Bausch and Lomb, India
The Budget 2018 has been presented in the backdrop of economic growth expectations in the region of 8% in the near future and a target to reduce fiscal deficit. The Budget has done well on directing the government’s priority to two important sectors for the economy, agriculture and health. The proposal to provide insurance cover of Rs five lakh to about 100m families and establishing 24 new medical colleges is in the right direction to provide quality healthcare services to economically weaker sections of the society.
As for the direct tax proposals, the proposal to reduce the tax rate of 25% for companies with revenues up to Rs 250 crore 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 in this budget to improve the disposable income for the middle and salaried class.
Overall, we would rate the budget as a mixed one that aims to improve the quality of life for weaker sections. But the increase in cess and introduction of long-term capital gains would impact consumption.
Aashish Kasad, Partner and Consumer Products and Retail Sector Tax Leader, EY India
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. There are several positive measures for boosting the agricultural economy, including the food processing sector, in terms of an increase in the MSP for the kharif crop to 1.5 times the cost of produce. Also farmer-producer organisations will be entitled for a 100% tax deduction for the AY 2019-20 until AY 2024-25, if their total turnover is less than Rs 100 crore in a year. Corporate tax rate has been reduced to 25% for companies having a turnover less than Rs 250 crore 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. 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.
Sanjay Kumar Kalirona, CEO & Director, COMIO
The Union Budget-2018 is a positive step towards India’s growing smartphone market. The increased custom duty on mobiles will further boost local manufacturing and will be the essential push to create a manufacturing eco-system in India. Smartphones play a crucial role in today’s times and this budget is an extension to the ‘Digital India’ initiative. With focus on development, it is a progressive budget and is a stepping stone to India’s growth story.
Aneel Gambhir, CFO, Blue Dart
We welcome the Union Budget 2018, which has recognised infrastructure as a growth driver of the economy. The investments in infrastructure are estimated to be in excess of Rs 50 lakh crore. This will support the growth of GDP and connect and integrate the nation with a network of roads, airports, railways, ports and inland waterways.
To facilitate trade and e-commerce, the government should consider aviation turbine fuel (ATF) under GST as excise/VAT paid on these products is not available as input credit. Under the service tax regime, input credit was available for the excise paid on ATF. Under GST, this has a negative impact on logistics costs.