Will Budget 2022-23 put more money in the hands of consumers?
By Rajiv Raghunath - January 25, 2022
Demand creation will be the panacea
On February 1 when the Union Finance Minister Nirmala Sitharaman presents the Union Budget for FY2022-23 in the Lok Sabha, Indian OOH would be hopeful of announcements that help put more money in the hands of consumers across the country. One such move could be the allowance of higher standard deduction that lowers the individual taxable salary income, which in turn could spur the pent-up demand for goods and services in the country. The ensuing demand creation will likely have a positive cascading impact on brand spends on marketing and advertising.
The optimism stems from the expectation of rapid GDP growth anticipated over the next couple of years, as cited in Deloitte’s paper on ‘Budget Expectations’ released in the current month: “We expect GDP to grow at historic high rates for two or more years, thereby, healing some of the scarring that the pandemic has left behind. GDP growth is expected to range between 8.7% and 9.4% this FY 2021-22. Growth will continue to remain stronger in the following years as well, with the possibility of the economy growing at as high as 9% in FY 2022- 23 and 7.6% in the following year.”
The report also cites that “As businesses ramp up production, hiring and job opportunities will boost employment and income in the hands of consumers”.
The pandemic has had perhaps the most debilitating impact on the tourism and hospitality sector. To alleviate the challenges for this sector, the consulting major recommends that “The government must try a few out-of-the-box ideas or experiment with initiatives followed in the other parts of the world. One such experiment could be of tourism “sandboxes” (followed in Thailand and Indonesia), and invite fully vaccinated foreign tourists to travel a limited area. Improvised service offerings could boost the hospitality sector. The government must look into short-term revival plans as well as long-term plans to address the structural changes these industries are going through and have contingency plans to deal with uncertainties.”
For OOH, any revival package or business-enabling measures directed at tourism growth will have a huge beneficial impact on its own business.
The pandemic period has provided an impetus to digitalisation of banking and financial services. Companies and ventures that have forayed into these areas are looking out for relaxation of digital tax/withholding tax for financial services transactions/securities that help boost investments on BFSI digital upgradation and innovations. As areas like these become more investment-friendly, that will bring more ventures and brands into the arena, contributing to more brands spends as well.
From the DOOH business perspective, the ushering in of 5G technology will be truly disruptive. The Deloitte report states that “As more countries move towards 5G technologies, it is imperative for India to support commercial deployment of 5G networks through a combination of budgetary, policy, and regulatory support, helping startups and enterprises create new revenue opportunities through enhanced communication and connectivity mechanisms.”
Automotive sector, one of the major source of OOH spends, has undergone major changes in the pandemic period. India is expected to be the third largest automotive market by 2026, and “the sector will be integrating technologies in the future, with electrified, autonomous, shared, and connected cars growing significantly”. Any budgetary provisions that accelerate these changes will encourage more auto brands to step up their efforts to wrest a sizeable share of the market.
In the real estate sector, the expectations from the FM are for Waiver of GST on under-construction projects, extension of benefit u/s 80EEA to avail additional Rs 1.5 lakh interest deduction on home loans, etc., that will boost the demand for housing.