CNBC AWAAZ #BFORBUDGET Special: Budget 2015's biggest challenge had nothing to do with the big numbers. It had more to do with the incredible expectations from the budget, from the 'Big Bang reforms' to other miracle cures. Expectedly, none of our lives has changed after its presentation, though there is certainly much to look forward to. And like much of what this Modi government does, it looks like most of the good things will have to be earned, not taken as a free entitlement. So where do we start?
At the outset, let's face it, as a service sector, our first task is to look at how this budget impacts our clients. All those lovely marketers who spend with us to ensure they can sell better. Are they going to be left happy with this budget? The consensus seems to be, yes. So that's a start.
A second interesting opportunity is in what is left unsaid. This is a government that believes in communicating. Too much, some would say, but as media owners have realized by now, too much communication is not a bad thing at all for media. So look forward to some great opportunities as massive 'game changing' initiatives like the Gold Monetization scheme/s, the Direct benefits Transfer, and milestones as and when they happen are communicated to the electorate, we mean, the country. There is more than enough to look forward to there. And if you don't see much of that, be worried, very very worried. As you will read below.
So what are the key points worth highlighting? Here they are, in no particular order.
a) Service tax hike to 14%: Any hike in taxes, especially one as ubiquitous as service tax, will always hurt. And this, more than anything else is the big one for the industry. Besides the extra cost to clients, there is the question of its impact on the digital front, and on television spends.
This writer's prognosis? Nothing substantial, although expect an even harder look from clients at their television spends, vis a vis digital. Print, which remains exempt, can hardly afford to relax. An extension of service tax to the medium would almost certainly have given a violent push to its gentle slide to stagnation and degrowth. For now, well survived. The bigger worry for everyone should be the sword of a further 2% hike at a future date, for the Clean Ganga Swacchh initiatives, which will be decided based on tax receipts as they come in. If that hike happens, it will be truly an 'ouch' movement, and lead to some serious pain. So pray that your clients pay up their taxes.
b) Reduction in Corporate Tax rate to 25%: This is going to happen over 4 years. For an industry that lives from quarter to quarter, enough said.
c) Benami Transaction Bill: For an industry concentrated overwhelmingly in Delhi-Mumbai, and then some other metros, this could have a bigger impact than we imagine. With real estate transactions coming under a stronger scanner, this is the time for the industry bigwigs and others to start taking advantage of their insights into their clients businesses, and category prospects. And put their money where their mouth is, by investing more into equity, mutual funds and other investment options. Seriously. It is never a good idea to hold 85% of your net worth in real estate.
d) The crumbs of travel allowance, medical insurance: Your medical conveyance allowance has just been doubled. From Rs 800 to Rs 1600. Ok, Ok, not exciting. But the increase in deductions to Rs 25,000 for medical premiums should get you thinking. The combination of high stress jobs, and even higher job hopping means that too many of us are not adequately covered for medical emergencies. The FM has just given you a gentle reminder to go ahead and ensure that you and your family are adequately covered. Go ahead, do it.
To understand a common man's take away from the budget in an extremely simple and creative manner - Watch this video