Budget 2021 more of a booster shot than a vaccine, says brand expert Harish Bijoor

Brand expert Harish Bijoor decodes what the Budget holds for industry and growth in this chat with B S Manu Rao.

Is this Budget a good push for industry and demand?

I do believe Budget 2021 is a positive one for industry. However, I am not too sure how it will pan out on demand and demand creation. The Budget is good for industry as it is manufacturing-positive, worker-positive and investment positive. I quite like the six legs it stands on. This seems a Budget that aspires to reach every part of the economy as far as infrastructure, investment, well- being of people, innovation and R&D, and importantly, an accent on minimum governance and maximum government. Industry looks happy as of now. However, this is a manufacturing and productivity centric Budget. The pandemic created two issues. It cut and curtailed manufacturing and hurt several sectors of the products and services industry. While bigger businesses were relatively less hurt, the medium, small and micro industries were hurt badly. Hurt badly even to the point of no recovery. The Budget addresses this issue squarely. The pandemic also created the second issue of sluggish demand. The economy regressed into a functional and essential products and services mode.

Out here, every rupee saved by a home is considered an earning. Consumers downgraded from premium brands, and even consumed less quantum of the toothpaste and shaving
cream. Lipstick and cosmetic consumption of course went out of the window it had flown in through. Even housemaids and cooks lost their jobs and livelihoods. The second key issue is the fact that consumption and the mindset to consumption is down. The Budget does not address this second issue as much. And that is a concern. To an extent the Budget does believe that industry will now take charge, use all the positivity around, the budget sops included, and produce robustly. In the bargain, more jobs will be created, and the positive cascade of more money in the hands of labour will result in more buys. We will need to wait and see how this pans out. The Budget is therefore good for industry and just about neutral to demand and demand creation.

Do you see growth picking up this fiscal?

Growth is indeed a function of two things. One is sentiment and the other is real money in the hands of real people. It is important to create a positive sentiment among a whole host of consumers sitting on the wall of consumption. Consumers are just about emerging from the dark shadows of the pandemic and the fear it seeped into every nerve. As the consumer emerges from the fear economy, it is important that the positive factors that spur positivity are focused upon. The vaccine and its efficacy, a very quick roll out, the ability to get vaccinated at own will, as opposed to government’s will, are positive factors to address. Add to it the ability for small businesses to revive themselves and start-back is an important factor as well.

I see growth getting back. The pity is that I see it getting back at a slower pace than it must. I see April looking better the remaining two months of this fiscal.

What’s your forecast for the manufacturing sector, especially Atmanirbhar Bharat?

Aatmanirbhar Bharat, across its variants 1.0 to 3.0 will gobble up as much as Rs 27.10 lakh crores. That’s a fat package in itself. The number represents well nigh nearly 13
per cent of GDP. That’s big! The manufacturing sector revival is a given. Bigger companies will do better than the smaller ones for sure. The smaller ones are still grappling around with pandemic uncertainties. Input cost of materials have gone through the roof and smaller establishments are finding it difficult to find their footing right. Even this shall pass. If the virtuous circle of good production leading to good consumption and demand does happen, it will be business as usual. There is no reason why this should not happen, provided the pandemic sentiment is shed totally. We need to wait and watch.

The Budget is capital expenditure-focused, and I like that. It is equally determined to create infrastructure for India that a progressive India deserves. I do strongly feel that there is a need for a consumption-centric set of activities that we need to focus upon. Possibly even a marketing and advertising campaign to go with it. Possibly every manufacturer needs to invest in this. We need to bring positive sentiment back.

Is this budget helping move towards reforms?

Budget 2021 is certainly reforms-centric. The minimum governance and maximum government dictum gets a bit more of a nudge in this Budget. The disinvestment target of Rs 1.75 lakh crores is an impressive target. I hope it is achieved for sure in the new fiscal. A more transparent, efficient and accountable tax system is what the finance minister promises. That’s a good sign. There is a huge fiscal deficit slippage in the year ahead, with a stated peg of 9.50 per cent of GDP. This is a record number in itself. But then, the pandemic has been a record event in itself. To an extent, this fiscal deficit number may represent a one- time cleaning out even. It that’s to be true, even this shall pass. Literally, every
country across the world has used the pandemic to be a time to clean it all up. The higher fiscal deficit in a post-pandemic era will be perceived to be a stimulus really. And that’s good in itself.

Do your foresee some traction for the core sector?
The pandemic has really shrunk the core sector. I do not believe it can shrink any further. Therefore, it can go no worse. Expecting an overall growth of 11 per cent on GDP in the next fiscal on the lowest base ever, is not going to be an issue at all. My only worry is on the count of the fine-print of the Budget, which we will get to read soon. At the moment, the stock-markets and indeed every one of us is reacting to the bumper-stickers of the Budget. The Budget is, however, not a bumper-sticker alone. The fine-print needs to be read in every annexure there is to read. My reading wants to take me through those crucial fine-print points. If there is so much given, what is taken out? If there is Rs 35,000 crores given to the vaccine programme, what is taken out as an outlay? I wish to read more on that count.

What more would you have liked to see in the Budget?

Very importantly I would have liked to see lots of consumption spurs as opposed to manufacturing spurs alone. We can manufacture all we want, but without the
sentiment to buy and use, all manufacturing is quite useless. I however see this Budget not as a ‘Budget vaccine’, instead I see it as a ‘Budget booster shot’. I love the language, tone, tenor and decibel of the Budget. One that will spur manufacturing activity. One that will get jobs in the sector going. One that will also possibly cascade consumption eventually, when the rubber hits the road. We need to now just witness it all happen. Happen it will.