Every year, the Budget is closely watched by industry stakeholders and retailers, who await to understand how announcements made therein could affect their business. This year, this scrutiny was magnified as this was an interim budget, the last one presented by the Narendra Modi-led government, before the country heads for polls. Expectations were high that the budget declarations would have a feel-good factor as it would put the ruling party in a stronger poll position in what is expected to be a highly-contested Lok Sabha election.
These expectations were not off-the-mark. Overall, the Interim Budget came out positive for SMEs, farming communities and the taxpaying middle class. The biggest standout proclamation was the tax rebate for salaried people for up to INR 5 lakh income. Also, income support for farmers holding less than two hectares land is expected to fuel consumption in rural areas.
People in the retail business have by and large hailed the interim budget as one that will encourage more consumption by rural and middle class buyers, thereby boosting the industry by extension. Given that this strata forms the majority consumers in the country, Finance Minister, Piyush Goyal, has managed to put a smile on retailers’ faces.
The owner of RK Electronics, a Jalandhar-based consumer electronics retail outlet, pointed out that increase in disposable income, especially in rural areas, will encourage purchase of white goods. This segment witnessed a slowdown in 2016-17 after the demonetization, and the introduction of GST only compounded matters, with sales declining further.
“The interim budget’s announcements will leave middle class taxpayers with more discretionary spending power. Most of these buyers might use it to buy entry-level products in LED TVs, refrigerators and washing machines, which have become economically viable after GST rates were reduced to 18% from 28% recently. With more money in their hands, they will be keen to upgrade their lifestyle,” he pointed out.
Shreyansh Kapoor, VP of Kashi Jewellers is hopeful that the gems and jewelry industry will see a positive impact as the budget has announced some favorable policies that will benefit their buyers. “The extra disposable income will prove beneficial to the luxury retail industry. Encouragement to the infrastructure is also a great vision for overall industry growth as it will connect more and more customers with us, especially buyers from tier-2 and tier 3 cities,” he stated.
Jitender Singh, Founder and CEO of MiniDukan also welcomed the news about digitization of rural towns and cities. This will be beneficial for companies which deal with customers in tier 4 to 6 towns, since the Government announced will introduce 1 lakh digital villages in the next five years. “Digitization of rural areas has increasingly become a necessity, as a large section of our consumers are based there. Of course, the greatest benefit for us will be the reduction of taxes on salaried individuals which will result in greater buying power, which is exactly what we have been hoping to achieve. This Budget is sure to provide a great boost to the overall performance of SMEs,” he emphatically stated.
Vikram Oswal who operates Ashapura Mobiles, a mobile store in Vadodara, was happy to hear about the easing in the GST process for SME retailers. “It is great that SMEs earning less than INR 5 crores will have to file GST only once in three months. This will helps companies like ours, which find it a cumbersome task,” he said.
Gurdarshan Singh, who has a logistics company, also pointed out that the government’s announcement to boost infrastructure by ensuring connectivity via waterways is a positive one. “This will help companies to connect through various cities that were difficult to commute earlier, which will help the transportation and logistics business. It will also reduce the transit time for products and ensure faster delivery, which is a win-win for everyone in the retail industry,” he pointed out.
It is clear that Finance Minister Piyush Goyal presented the interim budget keeping an eye on the upcoming Lok Sabha elections. Exempting tax for up to INR 5 lakh income for individuals, a new INR 3000 per year pension scheme for unorganised sector workers, making interest income up to INR 40,000 in post offices and banks tax-free, interest subvention for farm loans – these are some announcements purported to have a positive impact on the spending power of middle class and rural consumers. And the retail industry isn’t complaining.