Union Budget 2009: Mixed baggage for media and entertainment

By Sangeeta Tanwar , afaqs!, New Delhi | In Media Publishing | July 07, 2009
While newspapers stand to benefit from the extension of the February stimulus package, the DTH industry feels the heat with the introduction of 5 per cent customs duty on set top boxes

The Union Budget is out and has some sops and some not so great news for the media and entertainment (M&E) industry.

Finance minister, Pranab Mukherjee seems to have got a thumbs-up from the M&E fraternity for completely doing away with the fringe benefit tax (FBT). FBT amounting to 20 per cent was being charged for travel, food, hotel and other expenses incurred by the workforce engaged in outdoor shoots.

The second big announcement is the government's decision to continue with the benefits extended to the print industry as part of a stimulus package announced in February 2009. The print media will continue to benefit from the waiver of 15 per cent agency commission on DAVP (government advertisements) and hike of 10 per cent in DAVP ad rates.

The third big and not so encouraging announcement is the reintroduction of 5 per cent customs duty on set top boxes.

afaqs! sought the views of stakeholders representing broadcast, print, radio, advertising and media, to gauge the industry mood after the Budget announcements for the M&E industry. Here are the jubilations and disappointments flowing from the Union Budget 2009.

Hormusji N Cama, president, Indian Newspaper Society (INS)
The Budget sops for the print industry do not come as a surprise, because they are merely a continuation of few concessions announced in October 2008, when DAVP advertising rates were revised. We were very well aware of the fact that the I&B Minister had put forward the demand for continuation of ad rates before the Ministry of Finance.

However, what has been ignored is our demand to card rates, when it comes to deciding advertising rates. At present, the government, being a bulk buyer, goes by the notion that it has the right to dictate the rates, instead of just negotiating the best prices for itself. We wanted this to change.

The removal of FBT is a welcome step. The extension of concessions such as waiver of 15 per agency commission on DAVP (government advertisements) and hike of 10 per cent in DAVP ad rates are right moves, but these do not amount to huge benefits for the industry.

What is required and was expected from the Budget was reduction in customs duties levied on various equipment (print machinery), which at present is considerably high under various tax slabs.

Apurva Purohit, chief executive officer, Radio City and president, Association of Radio Operators of India (AROI)

Removal of FBT is a big relief for both the employees and the organisation. It will take care of considerable expenses of any organisation.

Unfortunately, radio has not been given any respite in this Budget. Nothing has been done to address the revenue loss suffered by the industry because of the economic slowdown. Sops doled out to print should have ideally been extended to radio as well, given the fact that it is a relatively nascent industry and also the only industry that pays the government a license fee.

The other two demands that have not found their way into the Budget are our proposal for moratorium on licence fee and the proposal of bringing the FM industry in the purview of priority lending sectors, which would have made taking bank loans easier.

These two moves would have together helped the FM industry tide over the economic slowdown.

Colvyn Harris, chief executive officer, JWT India and vice-president, Advertising Agencies Association of India (AAAI)

On the surface, the move to do away with FBT might look attractive, but the truth is that in some form or the other, the burden will shift to the employees. The tax sop appears cumbersome to me.

Newspapers could manage to walk happy with DAVP concessions thrown in, but the truth is that a 10-15 per cent hike or reduction turns out to be nothing but a notional benefit.

To me, it appears to be a directional budget, as it does not provide any indicator for achieving the 9 per cent growth in the economy. The roadmap to economic development is missing. I hope that Budget 2009 is a work in progress.

Annie Joseph, secretary general, News Broadcasters Association (NBA)

The broadcast industry used to run up huge bills on expenses for news gathering. So, the withdrawal of FBT is a welcome move. It proves that the government has recognised our grievances.

However, the Budget has also left the industry unsatisfied on two accounts. The fiscal stimulus announced for the print industry in February 2009 has been extended for another six months (till December 31, 2009).

Even then, the broadcast industry was denied the benefits of the stimulus package; and this time too, we have been denied any concessions. This is nothing but discriminatory.

We had been arguing with the government to consider our case, but this Budget proves that the government, for some inconclusive reasons, continues to believe that the broadcast industry has not taken a beating due to economic downturn.

Second, the industry's demand for abolition of service tax on advertising has also gone unaddressed. Print is excluded from the service tax, which roughly comes to about 12 per cent tax plus educational cess. This again amounts to disparity, because be it print or electronic media, both are in the business of space selling. So, what is the basis of such discrimination?

Again, for conditional access system (CAS) to be fully implemented, some sort of incentive has to be extended to direct-to-home (DTH) players. Implementing 5 per cent customs duty on set top boxes goes against the government's own digitalisation policy.

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