Budget takeaways: How are consumer needs going to change?

Harish Bhat | Updated on February 07, 2020

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In a fluid economic situation, marketers need to zoom in on new pockets of growth

Budget 2020, tabled in Parliament last week, has now been analysed in great detail, by economic gurus and political pundits alike.

Many analysts hold that the Budget did not meet the high expectations we had of the Government, while others have opined that the Government has put in place a prudent set of moves to address issues in several segments of the economy. This debate will go on.

Meanwhile, as marketers, I believe that one of our key roles is to seek out growth in any given scenario. We have to understand how our customers’ needs are likely to change in a fluid economic situation, and where exactly new pockets of growth are likely to emerge. And I think the Budget holds many such opportunities for growth. Here is an initial walk-through of some of these potential spaces.

The new income tax regime in the Budget is likely to benefit a significant segment of the middle class, though it holds little cheer for the upper middle or affluent classes.

Higher disposable incomes


It is likely that many people with incomes below ₹15 lakh per year may shift to the new optional plan of lower income tax rates and no exemptions, post detailed calculations. Yes, the new system is rather complicated, nonetheless it is likely to put more money in the hands of a large number of middle-class people.

Will this additional disposable income be ₹40,000 crore, more or less?

In my view, the exact quantum does not matter, because the range in which this figure will eventually fall will still be large enough, and will drive higher demand and uptrading in many product categories. Marketers who figure out how precisely to tap into this enhanced middle-class demand will emerge as winners.

New rural possibilities

The Budget contains a firm commitment to double farm income within the next three years i.e. by 2022.

Towards this objective, the Finance Minister has unveiled several schemes for rural India, including higher crop insurance coverage, and robust warehouse and cold chain infrastructure to ensure better storage of farm produce. There has also been reference to Kisan Rail, which will help faster movement of perishable farm products.


Higher farm income will create new rural demand, for sure. For marketers of commercial vehicles, tractors, cement, irrigation equipment, including pipes used in agriculture, this creates fresh new opportunities in the short term.

In addition, all products that meet rural needs, including FMCG products such as tea and soap, are likely to benefit in the medium term, as farm incomes rise gradually over the years — subject, of course, to good implementation of the schemes.

Make in India

The Budget has levied significantly higher customs duties on imports of several products, thus signalling the Government’s determination to push the momentum on “Make in India”. This includes diverse products such as footwear, toys, kitchenware, shavers, hair-dryers, table and ceiling fans, coffee and tea makers.


Economists will no doubt argue whether this move is progressive, or not, and what its long-term impact is likely to be.

But Indian manufacturer-marketers of these product categories will surely be in a position to leverage this budgetary move, which, in the Finance Minister’s own words, is for “ensuring a level playing field for the domestic industry.”A second order effect is likely to be the creation of jobs in the country, as industry attempts localisation of these products — and if that succeeds, it will, in turn, create new demand too.

Infrastructure push

The Budget contains several announcements in respect of investment in core infrastructure areas, including economic corridors, roads and highways, railways and solar power generation.


This includes an allocation of ₹1.7 lakh crore towards transport infrastructure, and specific initiatives such as new Tejas-type trains to tourist destinations, large solar power capacity creation alongside rail tracks, 100 new airports in the country to boost tourism, several thousand km of highway development, and a large local suburban transportation project in Bengaluru, my home town. This relentless focus on infrastructure creates big opportunities for marketers in all these infrastructure-related sectors, including construction, capital goods and cement. In all these cases, the most trusted, capable and cost-effective brands are likely to perform well.

Life Insurance

As increasing numbers of middle-class people shift to the lower income tax rates regime, where very few tax exemptions will be available, the tax-saving charms of life insurance products will gradually reduce. A consequence of this will be an increased focus on protection of life as the primary objective of such insurance, which has the potential to transform this sector in the long term. Marketers of insurance should take note.


In a related sector, the enhanced insurance cover on bank deposits will offer some comfort to middle-class investors, and marketers in banks can leverage this development in interesting and positive ways to assure and attract a larger number of depositors.

Hunt for pockets of growth


One big message from this Budget is that there is no silver bullet to fast-track the growth of the Indian economy, in the near term. We will have to work hard for growth. Therefore, more than ever before, the onus is on marketers to identify new pockets of growth within their respective categories, and innovate to meet emerging consumer needs in these pockets.

This will require sharp consumer insights, relevant product development, and smart marketing. Good luck!


Harish Bhat is Brand Custodian, Tata Sons. These are his personal views.

Published on February 07, 2020

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