Fast moving consumer goods industry expects the upcoming Union Budget 2023 to take measures that would enhance disposable income in the hands of consumers and improve rural infrastructure that could lead to demand generation and accelerate consumption, said some industry players.
Boosting of disposable income in the hands of consumers can be done through beneficial tax regime, said Saugata Gupta, MD and CEO, Marico. “The upcoming Union Budget should focus on boosting disposable incomes of the burgeoning middle-class through favourable fiscal policies and beneficial tax regimes that should eventually lead to demand generation and accelerate consumption at the middle and bottom of pyramid,” Gupta said.
In the last one year, inflation has impacted demand in the sector, especially in the rural areas. The FMCG sector witnessed an overall volume decline of 0.9% in September quarter, 0.7% in June quarter, according to Nielsen data, because of inflationary pressures that dented consumer demand. Within this, rural markets recorded volume decline of 3.6% in September quarter and 2.4% in June quarter because of double-digit price increases and lower unit growth. Urban markets, however, grew 1.2% in July-September and 0.6% in April-June, it said.
Therefore, it is necessary for measures in the Budget that would enhance income in the hands of consumers, be it in form of cut in tax slab so that consumers can spend more, said Mayank Shah, senior category head at Parle Products. But a more prudent step would be if there is increase in the current exemption limit, he added.
The maximum slab of income which is not chargeable to income tax is `2.5 lakhs currently.
Industry players also expect to see continued thrust on building rural economy that could revive demand from rural areas.
While significant efforts are being made by the central bank to rein in inflation, there should be continued thrust on building rural infrastructure that would re-energise the rural economy through long-term job creation.
Moreover, strengthening of public infrastructure while incentivizing private participation towards India’s infrastructure growth should continue to be one of the key focus areas, Gupta said.
Further, Sameer Shah, chief financial officer, Godrej Consumer Products
We also request a more ease and reduction in the cost of doing business. Currently, large spending goes into compliance, licenses, and regulations, Shah added.