On Thursday, 1st February 2018, Finance Minister Arun Jaitley released the much awaited Union Budget for the year. The Union Budget 2018 received mixed responses from the masses. While the restaurant and hospitality space was hoping for some positive changes in the budget for the new fiscal year, all the hopes have been dampened as the Union Budget has fallen quite short on expectations of the restaurant business.
Impact of Union Budget 2018 on Restaurants
While there seems to be no direct impact of the Union Budget on the restaurant business, the Union Budget 2018 gave a lot of focus on the agriculture sector and allocated an Agriculture Market Fund with a corpus of Rs 2000 crore. The government’s thrust on boosting the rural economy will most definitely have a trickling effect on the private sector, and certainly on the food and beverage space.
The food processing sector is currently at 8 percent and has been allocated Rs 1400 crore, that is, the double of what was before. This is expected to have an indirect positive impact on the restaurant industry as well.
The recent food trends have seen a shift towards organic and healthier food items. This boost from the government comes as a pleasant news for the restaurant industry as it will further encourage healthy food. Organic farming, fresh production, and horticulture will be given more focus.
Cultivation of horticulture in clusters helps in scaling the operations and can prove beneficial for the entire chain from production to marketing. Organic farming by Farmer Producer Organizations (FPOs) and Village Producers’ Organizations (VPOs) in large clusters will also be encouraged.
The Finance Minister also said that Women Self Help Groups (SHGs) will be promoted to take up organic agriculture in clusters under National Rural Livelihood Programme.
The government also proposed to launch an ‘Operation Greens’ on the lines of ‘Operation Flood’ that shall promote Farmer Producers Organizations (FPOs), agri-logistics, processing facilities and professional management. A budget of Rs 500 crore is proposed to achieve this aim.
This is expected to not only promote the agricultural activities but also simplify the entire logistics, from producing the raw materials to packaging and selling to the vendors and masses. Through this, we can hope to witness better supply of raw materials to the restaurant kitchens and higher quality of the agricultural produce.
There will also be an increase in the custom duties that would lead to a spike in the price of imported items.Price of some imported items such as fruit and vegetable juices will go up that can lead to an increase in beverage costs at restaurants.
Union Budget 2018 has brought about several positive changes, especially for the agriculture sector, and this is most certainly likely to improve the supply as well as the quality of the raw materials.