Tag: BudgetSpeak

By Anisha Motwani

 

With strong fundamentals, the Indian economy has tremendous growth potential. The new government has shown intent in the right direction and the Union Budget must turn them into actions to make a difference.

 

The country’s economy grew by less than 5% in FY2014. To regain the 2006-7 buoyancy of 9.6%, fiscal discipline in the near term is very important to maximise growth in long term. The new government should make effective use of resources to boost revenue generation. Implementing the Goods and Services Tax (GST) and broadening the tax base would help create the fiscal space for accelerated growth. Also, a reform in Direct Taxation could provide much needed impetus to sluggish Indian economy with simplified tax structure and transparent tax laws.

 

After some months of moderation, food inflation again reached 9.5% in May 2014. The new government must control high inflation, as it eats into disposable income of households that affects the savings capacity. Supply side reforms are essential for a lasting solution and a comprehensive monetary and fiscal policy should be in place to rein in inflation across various components of WPI and CPI.

 

Keeping in view the dented disposable income in the hands of individuals, the Finance Minister should provide relief in income tax burden to individuals so that household savings rate could again pick up.

 

Life insurance plays a critical role in utilisation of small savings for infrastructure development. To help the sector further enhance this role, the government has to provide right tax savings support to the long-term savings instruments and clearly differentiate it from short-term financial instruments.

 

The insurance industry expects the Finance Minister to make announcement related to FDI increase in the sector and also implement the long pending Insurance Bill amendment.

 

Specific to life insurance industry, there is a need to increase the limit for deducting tax at source on annual commission payable to agents from current Rs 20,000 to Rs 50,000. There is also a need to rationalise service tax rate on life insurance policies which was increased to 3% on first year premium.

 

Anisha Motwani is Director and Chief Marketing Officer, Max Life Insurance

 

Series coordinated by Shobhana Nair

 

By Ashish Bhasin

 

Rationalization of Tax Practice on Advertising and Media Industry: Here, specific reference is to the service tax which has to be rationalized. The surcharges need to be removed. Service tax is chargeable only on our kind of service industry therefore there should not be any VAT-related harassment.

 

Simplify Tax Processes: Nobody minds paying the tax but the interpretation particularly by tax authorities, government and the entire chain is inclined towards harassment. Grey areas are deliberately left open for interpretation which allows them the power to exploitation. So the simplification of the process has to be made completely transparent and easy for any person to follow.

 

Policies for General Economic Development: Advertising as an industry is very dependent upon how the overall industry is faring. We would like to see policies which are for the general benefit for the industry which then directly or indirectly benefits the advertising industry.

 

Special Incentives for the Advertising and Media Industry: We have never been recognized as an industry. For example, Cement, Iron and Steel, etc. have been there for hundreds of years and therefore recognized as an industry. We are significantly newer in terms of contribution to exchequer. We have never been given status as an industry. Therefore there should be incentives to do more research and development, to create opportunities for teaching advertising as a craft and as a profession. Some benefits should be announced which will accrue and help us become a more robust industry.

 

Clear Decision-Making: Policies like FDI, foreign investment in media, monitoring agencies and FM Phase III require clear decision making and the implementation of the same.

 

Ashish Bhasin is Chairman & CEO South Asia Dentsu Aegis Network, Chairman Posterscope and psLive – Asia Pacific

 

By Sanjay Tripathy

 

In the absence of a formal social security framework there is a need to provide tax incentives for growth of disciplined savings behaviour. I believe Life Insurance plays a critical role in using small savings for capital formation. To encourage savings for the growth of economy, the present limit for deduction under section 80C of the Income Tax Act needs to be increased for life insurance premium or there should be a separate limit for such long-term financial products.

 

Service tax exerts adverse pressure on insurance companies to offer plans at a more affordable rate. Revision of these rates and exemption of the tax on preventive health check-ups will be a welcome move from the Government. Further, to give impetus to long-term financial planning, Annuity and NPS payouts should be brought under EEE regime. An important step to help the Indian insurance industry would be to increase the investment flow through higher FDI limit (from 26% to 49%). This move by the government can be a game-changer for the financial sector and also help in improving the economic sentiment of the nation.

 

Sanjay Tripathy is Senior Executive Vice President – Head Marketing, Products & Direct Channels at HDFC Life

 

By CVL Srinivas

 

If Information Technology was the hero of the 1990s and early 2000s, the Media and Entertainment (M&E) Industry has the potential of emerging as the next big growth driver of the Indian economy. We have all the ingredients of making it really big – a Rs 1000 billion+ industry, a 1.2 billon strong entertainment hungry market in India and a growing number abroad, the most active and diverse film industry, over 600 TV channels, a print industry that is still very large and growing unlike in most other countries, a radio industry that has managed to do well despite all the constraints, a growing digital industry that is seeing a lot of world class innovation and IP creation, a talented advertising industry and a very skilled base of data and analytics resources that can play an important role in the data rich digital era.

 

There are three levels at which the government can help fast track the M&E industry, some of which are related to the budget and the rest more linked to policy.

1. Make M&E businesses more viable: There are a host of areas that need to be looked into urgently to help the industry get super charged. From a reduction in custom duties on STBs, digital infrastructure and a rationalization of taxes for DTH players, the government can create a more viable environment for the broadcast sector. With Indian diaspora spread across the world, Indian TV channels must be encouraged to expand their footprint and create global brands. The print sector has been hit badly by the rising costs of newsprint and the implementation of wage board recommendations. Given that we are one of the few countries where print continues to grow, the industry needs support. Faster implementation of radio expansion through Phase 3, stimulus to help expand cinema reach in smaller towns and rationalization of entertainment tax on cinemas are some of the other measures that can be taken.

 

2. Ensure policies are sensible and actionable and don’t cause disruption in the short-term: We had a fair bit of disruption in the past 12-18 months due to policy announcements that were either ill-timed or not followed through with action. For all policy matters, the government would do well to consult all stakeholders and not play to any one section. We need special emphasis on new media, convergence and digital as many areas either lack policy or fall into grey zones.

 

3. Make India a global M&E hub: In this age of digital disruption, India has a great opportunity of becoming a global M&E hub. The government must co-create a vision with industry stakeholders that will give India its rightful place in this sector on the global map. The starting point is to ensure we invest in talent especially developing a skilled resource base in new media. We are seeing a lot of homegrown technology-led innovation in the broadcast sector as well as in mobile, digital and data. Special zones that harness the entrepreneurial spirit in M&E areas need to be created. We can develop a world class cinema ecosystem and help revive cinema in many countries. In addition, tourism infrastructure linked to our film and entertainment industry can be created.

 

CVL Srinivas is CEO GroupM South Asia