Union Budget garners mixed reactions from retail fraternity

The Union Budget has received mixed reactions from the retailers’ community. For retail experts, the tax reduction announcement from 30 per cent to 25 percent for small companies with an annual turnover of Rs 50 crores along with tax reduction to 5 percent on income Rs 2.5L-5L is going to cheer up retail and consumption, feel the experts. According to Kumar Rajagopalan, CEO, Retailers Association of India, it’s a pro-consumption budget. The Finance Minister has kept something for everyone, with major emphasis on accountability and transparency. We have already witnessed a big tilt towards modern retail post demonetisation and the measures proposed will further accelerate the pace. We await implementation of GST to further the cause of chain store and omni-channel retail in the country.

Budget brings in optimism

Terming it as a game changer Budget, Krish Iyer, President & CEO, Walmart India, said, it continues to rightly focus on rural, agriculture and infrastructure sector with an aim to give boost to formal economy. The planned investment in these sectors will not only create much needed jobs in the country but also spur consumer spending and boost economic growth. Fiscal deficit too has been contained very well.

Govind Shrikhande, Customer Care Associate & Managing Director, Shoppers Stop, has a different take as he said the budget is set amidst a complex geopolitical atmosphere punctuated by the US Fed rate, global protectionism and oil prices & a muted domestic sentiment owing to demonetisation. Against this challenging backdrop, the government’s efforts to maintain the fiscal deficit at 3.2 per cent, CAD at .3 per cent, forex reserves at 361 billion dollars and increase FDI flow by 36 per cent are indeed commendable. Focused initiatives for rural growth through infrastructure investments, housing and financial assistance to farmers will boost agricultural growth and bolster the farm-to-market chain.

In line with the PM’s vision to dismantle bureaucracy, the FM’s announcement to abolish the FIPB and further liberalize FDI policy deserves a round of cheer. The government’s continuous focus to bolster the digital economy is definitely applause-worthy. For Shrikhande, the budget has focused on measures to sustain India’s poster-image of growth against the backdrop of an otherwise dull global economy. And while, the FM may have endeavored to ease the burden of the common man, he doesn’t seem to have met the mighty burden of expectations on this budget.

Arun Ganapathy, CFO Spykar Lifestyle says, reduction of personal income tax would increase the disposable income in the hands of individuals. As mentioned by the Finance Minister, about 96 per cent of individuals have an income of less than Rs 5 lakh and they tend to gain on reduction in income tax rate for income upto Rs 5 lakh. Also, there were no changes in indirect taxes as expected by us, though there were some expectations in the market that there would be a change in service tax.”

Anil Talreja, Partner, Deloitte Haskins & Sells LLP feels the budget has encouraged consumer business players. Besides increased focus on sectors like agriculture and farming, packaging, dairy processing, textile, footwear and leather there are a few tax proposals which should have a positive impact on consumer business. A reduction in tax rate by 5 per cent to the companies with turnover of up to 50 crores would benefit the players engaged in consumer business segment falling under this threshold with increase in profitability. Additionally, a reduction in tax rate of middle class individuals earning between 2.5 lakhs to 5 lakhs would increase their disposable income, which they may spend on consumer products resulting in increased revenue for consumer business players.”