Fast-moving consumer goods (FMCG) companies are hoping the upcoming Budget will improve the purchasing power of rural consumers, as the firms eye a faster recovery in the market.

Market researcher NielsenIQ said rural growth has outpaced urban growth for the first time in five quarters in the January-March period this year. Companies hope this pace will quicken with a consumption-friendly Budget coupled with a likely good monsoon.

“I expect this Budget to be balanced both from an investment and consumption perspective,” said Mohit Malhotra, chief executive officer, Dabur India. “A rural stimulus will aid faster recovery in the marketplace. This along with the forecast of a good monsoon this year should augur well for FMCG companies,” he said.

According to Suresh Narayanan, chairman and managing director, Nestle India, the Budget should put money in the hands of the middle class and rural consumers as demand revival is critical. “Food inflation at 8-10% is too high and has stifled staples and discretionary categories. The Budget will have to address inflation in general and food inflation in particular,” he said.

He also highlighted the need for employment incentives for the food processing industry, which has one of the best capital-to-employment multiples. “It is heavily backward integrated and employment initiatives will facilitate further growth of the market, Narayanan said.

Sanjiv Puri, chairman & MD, ITC, who is also the president of the Confederation of Indian Industry (CII), said last week that the government needed to continue its capex-led growth strategy along with fiscal consolidation.

“A part of the windfall dividend of Rs 2.1 trillion from RBI could be used to increase capital expenditure by 25% in FY25 from the revised estimate (RE) figure of Rs 9.5 trillion for FY24. While it is still infrastructure that is powering the nation, domestic demand is expected to be better,” Puri had said. In an interview with PTI, he also suggested income tax relief for the people
in the lowest slab, and that the process to simplify the tax regime should continue.

CII has proposed initiatives such as industry engagement with the National Rural Livelihood Mission and setting up rural industrial parks to boost development. It has suggested that the Centre encourage states to reduce stamp duty on land transfers to 3-5% to lower the cost of acquisition for economic activity.

Mayank Shah, vice-president of Parle Products, said a focus on infrastructure development would help generate employment and would aid in ease of doing business.

“We expect this government to continue spending on infrastructure development. At the same time, focus on rural development and agri-initiatives, we hope, will increase in the upcoming Budget,” Shah said. He said the company is also hoping to see more measures to put money in the hands of people through income tax breaks or employment generation initiatives. “This will have a direct impact on the consumption of consumer products and will aid FMCG growth,” he said.