Government's move to enhance rural spending through welfare schemes like MGNREGA and reduction in tax rate on basic income slab would help drive demand for products, say leading FMCG firms.
Government’s move to enhance rural spending through welfare schemes like MGNREGA and reduction in tax rate on basic income slab would help drive demand for products, say leading FMCG firms. Godrej Consumer Products Ltd (GCPL) Managing Director Vivek Gambhir said that reduction in tax slab would leave more money with the consumer to spend and would increase the demand.
“It is largely positive for the FMCG sector, given the strong emphasis on rural stimuli. Focused efforts to boost the agrarian economy and improve agricultural productivity, increased investments in MGNREGA, should augur well for rural consumers,” he said. Gambhir further added: “The reduction of direct tax for individuals earning less than 5 lakh too will increase disposable income and drive demand for mass products.”
According to Marico Managing Director & CEO Saugata Gupta, the government increase in spending in rural areas and infrastructure would boost the demand. “The Budget is forward looking, consistent and pragmatic with overall focus on broad-based growth. We expect it to boost consumption, create more jobs especially in the rural and infra sector, given the thrust provided by the government to agriculture, MNREGA, infrastructure and rural productivity,” he said.
Jyothy Labs Joint Managing Director Ullas Kamath said that the Union Budget has laid lot of emphasis on middle-class and rural population.
“We see substantial demand emerging from tier II & III cities, as the government focusses on enhancing agriculture income, personal hygiene and sanitation. The focus on digital payment will increasingly shift consumers towards organised players,” he said. Homegrown Dabur CEO Sunil Duggal too said government’s decision to enhance allocation to MNREGA to Rs 48,000 crore would generate demand from rural corners.
“These, coupled with the skill development initiative, would not just strengthen the hands of the rural poor, but also help put more disposable income in the pockets of the rural consumer and ensure continued rural demand for branded consumer goods,” he said. Henkel India Country President Shilip Kumar said more spending on infra project would boost demand in adhesive segment.
“The increased thrust to infrastructure is a positive development for adhesive, sealant and functional coating manufacturers like Henkel,” he said.
Videocon Director Anirudh Dhoot said that high disposable income as a result of lower tax rates will lead to higher purchasing power of the individuals. “This will lead to increase in demand of consumer goods.”
Micromax Informatics Co-Founder Rajesh Agarwal said that focus on digitisation and reforms on restricting cash spending is an important step towards making India a digital economy. “Boosting more demand and upbringing rural economy will further give rise to public spending which will show results in the long run,” he said.
Panasonic India & South Asia President & CEO Manish Sharma said that a lot of impetus has gone to rural economy and allocation on infrastructure by the government would help in future.
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Retailers Association of India CEO Kumar Rajagopalan said the budget’s focus on ‘Transform, Energise and Clean’ India has some immediate-term as well as long-term impact on business in general, and retail in particular. “We have already witnessed a big tilt towards modern retail post demonetisation and the measures proposed in the Budget will further accelerate the pace. We await implementation of GST to further the cause of chain store and omni-channel retail in the country,” he said.
Shoppers Stop Customer Care Associate & Managing Director Govind Shrikhande said the modification in the tax slabs would boost consumption and create demands.
“Modification of the Income Tax in the sub 5 lacs slab to 5 per cent could moderately boost consumption. Here again, consumers seem to have been left wanting for more. We were hoping for broader and more impactful changes to boost consumer demand,” he said.