After a tumultuous year of the highs and the lows of demonetization, followed by the uncertainty of service tax, restaurant honchos were finally expecting some good news from Budget 2017. However after Mr.Arun Jaitley put forth the budget, the expectations of restaurateurs have come along with many advantages and a few challenges. The new budget of 2017-18 has introduced plenty of incentives that can directly and indirectly benefit the food and beverage industry. So let us take a look at the key features of this year’s budget.
1.The Union Budget has introduced the passage of the Constitution Amendment Bill for GST (Goods and Services Tax). However its extensive reach-out efforts for trade and other industries will start from 1st April, 2017 along with the new taxation system
2• With the inflation being in control, the CPI (Consumer Price Index)-based inflation has declined from 6% in July 2016 to 3.4% in December, 2016. This can have an impact on the buying behavior of restaurateurs who can buy goods and raw materials at much affordable rates. However the uncertainty around the prices for commodity goods and services are subject to price fluctuations.
3. One of the key features’ of the Union budget is its road map for a digital economy. This has introduced surplus liquidity in the banking system which will lower the borrowing costs and increase the access to credit. This feature will help generate new entrepreneurs in F&B industry that are willing to invest in their own start-up or restaurant business.
4• The Union budget has also focused on improving the infrastructure and other facilities like roads and electricity in the rural areas along with tier 2/3 cities. This will not only help to improve the supply chain management system for restaurant connecting the restaurants, but also help small and medium scale restaurant owners to open up multiple hotel/restaurant chains, which result in increased spending capacity of consumers, that help restaurateurs to grow their businesses.
5• The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has allocated a budget of 48,000 crores in 2017-18, which has been the highest since its inception. Also the Pradhan Mantri Kaushal Kendras that hone the skills of the youth have planned to extend their centers to more than 600 districts across the country. Thus an industry that contributes to almost 7.5% of the total GDP of the nation, will soon create more than 10 million job opportunities for the people in the coming months with the help of Govt.’s special schemes and incentives.
6• However speaking about the challenges, the Govt. is showing signs of retreat from the globalization of goods, services and people, as pressures for protectionism are building up and promotion of Swadeshi and the Make in India movement come into picture, thus restricting entrepreneurs and restaurant honchos to pool goods, services and human resource beyond the boundaries of the country.
7• Also dilatory decisions in terms of the service tax and formulation of policies regarding other tax exemptions such as VAT, service charge and GST is creating unnecessary anticipation amongst consumers as well as the restaurant owners.
All in all the new 2017 budget has put a relaxed foot over the restaurant business. Also the current re-monetization movement is slowly and steadily restoring smooth business operations and sales in the F&B industry.