Expectations from Union Budget 2022

31 Jan,2022

 

 

By Indrani Sen

 

Indrani SenThe Budget session in the Parliament is going to begin today and tomorrow, February 1, 2022, Finance Minister Nirmala Sitharaman will present Union Budget 2022. It’s an unprecedented situation when degrowth induced by pandemic has set back most industries in our economy by two years or more which has also been reflected in our GDP. The Advertising & Media (A&M) sector was severely affected by the shrinking of our GDP and researchers predicted last year that it would take the industry four to five years to recover to recover the pre-pandemic revenues across all media. What are the expectations of the A&M sector from the Union Budget at this critical juncture?

 

The pandemic has accelerated the growth of digital media taking its access beyond the upper-class to a large middle-class population. Simultaneously, it has boosted investments in new digital opportunities in regional languages beyond textual content, search engines and e-commerce limited to English. In fact, during the sliding of advertising revenues under the cloud of Covid-19, digital media was able to resist degrowth. It is estimated that by next year the digital media will have a one third share of the Indian advertising pie.

 

The digital industry is naturally expecting technology friendly taxation policy which will support its current growth momentum. However, unless the Union government combines the financial measures with suitable legal reforms later, the digital industry may not be able to take full advantage of the financial measures, if any, announced by the FM.

 

The digital industry flourishes with the use of their technology by MSMEs and Start-Ups. Favourable tax relief, subsidies, exemption on FDI and credits policies for MSMEs and Stary-Ups will not only help their growth in non-metro and smaller towns, but will also help digital industry indirectly.

 

The traditional media industry, particularly owners in the print and radio industry, have a lot of expectation from the Union Budget this year. The Print industry suffered both loss in advertising and circulation revenue in 2020 due to the lockdowns ushered by central and state governments following the out beak of the first wave of the pandemic. During the second wave of the pandemic, it was able to resist further degrowth of advertising revenue which was set on a path of recovery in the period between the two waves of the pandemic. The industry is expecting the FM to introduce an incentive package and to waive or reduce the 5% custom duty on import of newsprint and 12% custom duty on import of ink.

 

The print industry also has pending demand for an upward revision of the DAVP rates which have not been revised for a considerable time period. Apart from increase in the DAVP rates, industry also has a pending appeal for issuing a directive that commercially viable PSOs and PSUs should pay for their display advertising at the commercial rate and not at the DAVP rates, which should be reserved only for the central and state governments advertising on various government schemes/initiatives.

 

Radio advertising was the worst hit due to the pandemic and they have a pending long list of demands which includes relaxation on payment of license fees, reduction of GST on radio advertising spends, tax benefits on upgradation of technology to digital broadcasting and Capex expansion. FM radio owners are earnestly hoping that a few measures from their wish list would be implemented in the Budget 2022.

 

The TV industry has been set on a comfortable course of recovery after the initial set back during the national lockdown. The industry has been fighting with the Union Government over many legal issues and taxation policies which are a part of the proposed regulations. TV manufacturers, however, want the FM to reduce the tax on TV sets from 28% to 18% or at least introduce a differential tax structure based on the features of the TV sets based on the argument that TV can no longer be described as a luxury durable.

 

The advertising industry on the whole is expecting that this Budget will introduce some direct tax benefits for the consumers at large so that they can have higher disposable income which in turn will give a push to the sluggish demands which is being noticed in many product and service categories. We will know by tomorrow if they are hoping in vain or not.

 

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