Budget 2020: People may finally be able to buy soap, hair oil again thanks to FM’s tax, agri boost

Union Budget 2020: With FM Nirmala Sitharaman’s several announcements pertaining to agricultural sector and revisions in personal income tax rates in Saturday’s Union Budget, it is expected that people will finally have money to buy daily essentials such as soaps, hair oils and shampoos and the FMCG sector will finally get the much needed push for revival. The revised income tax slabs are likely “to give a boost to lower income individuals, especially rural segment. Expected to spur consumption for consumer goods,” a CARE Ratings report said on Saturday. As the government has also made higher allocations to the agriculture sector, “such measures aim to increase the income realization from agriculture and allied activities, giving a boost to disposable income,” the report added. Higher disposable incomes translate to increased rural spendings which is crucial for the growth of the FMCG sector. 

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Leaders from the FMCG industry also gave a nod to Finance Minister Nirmala Sitharaman’s second budget. “The provisions announced on revision in direct taxation for lower personal income tax liabilities along with emphasis on targeted measures for boosting rural economy will have a twin positive impact on FMCG,” Mayank Shah, Senior Category Head, Parle Products, said in a statement. FM Nirmala Sitharaman’s budget will definitely increase the discretionary spending thus benefiting FMCG the most, he added. Members from leading FMCG companies such as Marico, Dabur and Britannia also concurred. 

The government has increased the allocations to the agriculture and allied activities from Rs 1.2 lakh crore in FY20) to Rs 1.5 lakh crore in FY21. Various measures were also announced for improving marketing, warehousing, cold storage and increasing credit availability to the farmers. The government also announced a special railway and aviation scheme for easy transportation of perishable farm produce such as milk and fruits. The schemes called Krishi Udaan and Kisan Rail will fall under the purviews of two ministries viz Ministry of Civil Aviation and Railway Ministry.