Budget 2019: The rural slowdown is making headwinds for FMCG companies especially, who rely heavily on the majority rural population for consumption.
Budget 2019: Dabur CEO Mohit Malhotra expects that the government will announce fiscal stimulus to give a fillip to the overall economy as was mentioned in BJP’s election manifesto. “If the fiscal stimulus reaches out to rural and that is in line with the manifesto of the party, there will be some announcement of fiscal sops for the agrarian economy,” Mohit Malhotra told ET Now in an interview, talking about the rural slowdown. He added that if the transmission happens, the rural economy is expected to recover going forward. Many industry leaders and experts have also said in the past that Budget 2019 will be crucial to the economy and tackling consumer slowdown.
The rural slowdown is making headwinds for FMCG companies especially, who rely heavily on the majority rural population for consumption. As India is essentially agrarian and rural based economy and as most of the population resides in rural India, “Dabur has a high reliance on rural and it contributes about 45% of our sales,” Dabur CEO told the news channel. However, the same has suffered because the income in the hands of the consumer is going down and the stimulus that the government previously announced has not been transmitted. Mohit Malhotra also said that the shrinking of rural income is now reflecting in the purchasing power of people. Rama Bijapurkar, a renowned expert on the consumer economy, had also spoken earlier along similar lines and said that people spend when they have money.
However, the industry has a lot of expectations from Nirmala Sitharaman’s maiden budget which will be unfolded on 5 July. “The slowdown is momentary and not structural, we await budget to see reforms,” Dabur CEO said. He added that along with this if the monsoon is pretty okay, rural recovery is definitely on the cards in the second half of the year. Dabur, in its previous quarter results, had admitted that prolonged winters and delayed monsoons have affected the sales of the company and Dabur hopes that the same will reverse soon with healthy monsoons.