Decoding India’s Union Budget 2023 and its impact on consumer marketing
India's plans to become “a future-focused, technology-driven economy” were unveiled last week along with the Indian Union Budget 2023. The Drum asked some of the nation's marketing and business leaders to share their views on what the announcements could mean for consumer marketing.
What does the Union Budget 2023 have in store for consumers?
Amidst a slew of bouquets like “Union Budget 2023 will make India the growth engine of the world” and claims “we are moving along to become a $5 trillion economy”, the Government of India presented its Union budget a few days back. It is also the last full budget before the country goes for the Lok Sabha elections in 2024, to choose the next government, giving it a special significance. The previous budgets were presented in 2021 and 2022, in the Covid-19 impacted world.
This year, the Indian finance minister Nirmala Sitharaman spoke of the sharp focus, in the budget, on areas like “inclusive development, reaching the last mile, infrastructure & investment, green growth, youth power, and the financial sector”.
Here is what the industry experts have to say about this critical document and its possible impact.
Tarun Arora, chief executive officer of Zydus Wellness
(Zydus is a leading Indian pharma and wellness company headquartered in Ahmedabad.)
The 2023-2024 budget could help translate into improved consumer demand going ahead, on the back of some of the initiatives undertaken, which would lead to an increase in the disposable income of the middle class as well as initiatives to improve farmer incomes that drive rural markets. Overall, these would help in improving consumption-led growth.
However, volume growth in India has been a concern for most of the consumer goods companies in past quarters due to high inflation, particularly affecting rural demand, and the budget may not stimulate it in the short term.
From a marketing point of view, the government’s focus on AI and digitization could drive shifts in consumer behaviour deeper and at a faster rate as these technologies get democratized.
Mohit Malhotra, chief executive officer of Dabur India
(Dabur is one of the leading Indian FMCG companies.)
This is a budget that balances growth with fiscal prudence. The higher outlays on infrastructure development and agriculture will have a multiplier impact on the economy, while the changes in Income-Tax exemptions and slabs would go a long way in putting more disposable income in the pockets of the consuming class.
The biggest positive is the 33% increase in overall capital expenditure outlay on infrastructure development, which will take India towards becoming a true global powerhouse and help urbanise the hinterland. The funds announced for creating infrastructure in Tier-2 and Tier-3 cities will go a long way in boosting overall consumer confidence, and also help generate employment.
The heightened focus on rural infrastructure development would surely help improve the quality of life in rural India and ensure continued rural demand for branded consumer goods.
Anindya Dutta, managing director of VIP Industries
(VIP Industries is one of the oldest and largest Indian luggage brand companies.)
Being one of the leading players in the sector, we are pleased to see the government’s support towards the travel & tourism industry and the new Income tax slab for the middle class to boost their buying power. This collectively will create huge opportunities not only for tourism but also for its allied sectors, thus not only giving the travel-related industries its wings but will also increase marketing spending. We have already launched big marketing campaigns. With a tourism boost for Indians and increasing competition, there will be increased aggression with our digital marketing and advertising strategies this year to strengthen our market share.
The government’s impetus towards the digital economy will ensure that as new technologies like AI and 5G get adopted, more corporates will opt for new ways of marketing to woo their target audience. Overall, a better and more robust AdEx for the year.
Vibhor Gauba, associate partner at KPMG India
In any economy, marketing and advertising growth is a direct consequence of the overall economic growth across sectors. The strong focus on capital expenditure and deepening budgetary allocations across sectors bode well for the economy, making this a forward-looking and growth-oriented budget.
Increased liquidity, on the back of tax cuts for individuals, will help boost consumption expenditure across the board. This would have a direct consequence on advertising spending as companies look to woo these customers.
The government has also kept up with the push towards digital consumption with the National digital library and 100 labs for the development of 5G apps, as well as announcing 3 centres of excellent for Artificial Intelligence (AI) – all of which will help usher in innovation around media and entertainment use cases.
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Kartik Sharma, group CEO of Omnicom Media Group India
At a time when all eyes are on India - poised to grow and thrive despite the looming economic slowdown, India's 2023 budget is growth-oriented and abundant with reforms for everyone - right from urban and rural sectors to start-ups and digital India. From a marketer's lens, the budget provides impetus to the digital economy wherein transformation continues to be a key focus, with new frontiers of innovation like Artificial intelligence expected to pave the future roadmap for India's business landscape.
The budget has sparked a wave of excitement for a slew of tech-driven ventures. It's a good time for entrepreneurship and dreaming big, as MSMEs and start-ups have a lot to gain from the growth-focused nuances of the budget. Advertisers will have their eyes set on new policies and go forth with buoyancy which would lead to a well-performing AdEx.
Harish Bijoor, brand-strategy specialist
Budget 2023 has announced India's infrastructure plan with pomp. A 10 lakh crore investment plan is the biggest we have ever had. This means India joins the infra-development race meaningfully. Capex investments have a habit of spurring jobs. And a lack of jobs is today's bane. That is being sorted out.
More jobs mean more prosperity and more consumption. For the consumption economy of brands, this is a good thing. This is a budget that spurs consumptiveness to activate the virtuous cycle of supply and demand.
Advertising and marketing thrive in a consumptive economy. Expect a good double-digit growth rate for both.