Budget 2018: Dhanraj Bhagat, partner, Grant Thornton India, said, “Disposable income in rural India will increase, resulting in more discretionary spending and consumption, benefitting the FMCG sector.”
Budget 2018: Finance minister Arun Jaitley has pulled out all stops to boost rural incomes with an aspiration of doubling farmers’ incomes by 2022. He spelled out his intent by significantly increasing the spend. “In the year 2018-19, for creation of livelihood and infrastructure in rural areas, total amount to be spent by ministries will be Rs 14.34 lakh crore, including extra-budgetary and non-budgetary resources of Rs 11.98 lakh crore,” he said. Industry leaders universally welcomed the move. “It presses all the right buttons when it comes to fueling the rural and agrarian economy. These measures, coupled with the mega health insurance programme for the poor and spending on rural infrastructure, will go a long way in strengthening rural economy and boosting consumerism,” said Sunil Duggal, CEO, Dabur India. For fast moving consumer goods companies like Dabur, Colgate and Hindustan Unilever, the rural market, comprising about 850 million people across 6.5 lakh villages, is a big demand driver and accounts for about 40% of their sales.
Dhanraj Bhagat, partner, Grant Thornton India, said, “Disposable income in rural India will increase, resulting in more discretionary spending and consumption, benefitting the FMCG sector.” Saugata Gupta, MD & CEO, Marico, agrees, “The Budget has laid a strong foundation for fast-tracking economic growth. It is all-inclusive, forward-looking.” US Awasthi, MD, IFFCO, said: “These steps will generate higher income for farmers and create jobs.” Other segments likely to benefit are consumer durables, electronics, two-wheelers, tractors and small-ticket lending. Raman Mittal, executive director, Sonalika ITL, a tractor manufacturer, said, “Strong pro-farmer focus can provide much-needed stimulus to agriculture. Resulting growth can incentivise farmers to invest in mechanisation.”
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Lower tax for companies with revenues under Rs 250 crore is seen as a move that will spur jobs and boost incomes. Said Ramesh Iyer, MD, Mahindra & Mahindra Financial Services, “We look forward to tax incentives for MSMEs, which will ease cash flow.” This might also be a positive for organised retailers, but not all agree. Govind Shrikhande, MD, Shoppers Stop, said, “It appears to be a Bharat Budget. But lack of definitive measures to drive consumption leaves us wanting.” How strong the impact of the proposed measures will be depends on implementation, but for now, the sentiment is positive.