The annual festival of Budget presentation is keenly followed by the marketing community and also by the advertising industry. Till a few years ago the Budget had a huge say in the pricing of products and services. So agencies were ready with post-Budget price ads and sometimes we also did ads before the Budget announcing low pre-Budget prices. That era ended almost a decade ago.

Then came the fear of service taxes, and some of us were hoping at every budget that the demon would go away. But a few years ago we realised that the demon was here to stay and many more industries were getting into his tentacles. That left changes in duties of products, changes in corporate taxes and personal income-tax. These could have major ramifications, and therefore are eagerly followed by the marketing and advertising community. Sectors such as automotive, two-wheelers, durables are all subject to significant impact through duties. The same is also true for FMCG products. So it was a welcome signal that these sectors got two years ago when the Budget cut duties to very low levels. Those did go up a bit last year, but did not impact sales.

The advertising industry is largely driven by the sentiment prevailing with the marketing community and more importantly with the CEO. It is here that the Budget sets the mood. If the mood is that of stimulating growth, then that trickles down into all that the company does, including investing in advertising. If the mood is for cutting costs, that leads to a different set of actions. So what was it this year?

A Budget for Continuity

The Budget presented by the Finance Minister spelled continuity to me. Continuity of friendly policies, low tax rates and a gentle push towards an equitable distribution of wealth (NREGA is set to continue for a long time to come). The industry and we in advertising were worried about populist measures (what with the elections around the corner in several key States), but those fears seem to have been unfounded. We expected some changes in excise duties but there has been no major change.

A few products such as LED lights, mobiles and diapers will become cheaper. Hopefully, these sectors will also increase their ad spends and give added stimulus to consumption. The economy is expected to close 2010-11 with a GDP growth of 8.6 per cent and the growth forecast for next year is 9.0 per cent; both these should help keep the advertising budgets robust.

One major initiative in the Budget is the push towards creating a Unified Manufacturing Policy, set to take the manufacturing sector to 25 per cent of the national GDP from the current 16 per cent. We do hope this would mean more Indian brands that will need the support of advertising. Another interesting initiative is the move to link 250,000 villages through broadband; this in turn should help stimulate the digital advertising sector.

The nominal reduction in income-tax rates, lowering the age of ‘senior' citizens and the special favours bestowed on the 80-plus years segment, should help consumption. And we can expect many more nice ads featuring old people!

(Parameswaran is Executive Director and CEO, Draftfcb + Ulka)

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