The FMCG sector, facing challenges of inflation and rural economic slowdown, welcomed the Central government's initiatives to foster inclusive and sustainable growth, especially measures focusing on the rural economy, expecting a boost in consumer demand. Companies like Dabur, Marico, and Godrej Consumer Products anticipate increased consumption due to these budgetary initiatives.
Saugata Gupta, MD & CEO, Marico Ltd said that the substantial increase in capital expenditure allocation to an impressive Rs 11.11 lakh crore underscores a continued commitment to strengthen the country’s infrastructure, generate long-term employment opportunities, and drive overall economic growth.
Facing subdued rural demand that led to a decline in sales volumes in the previous quarter, the sector had requested government's intervention to stimulate consumption in the economy.
“While not immediately pandering to populist impulses, the budget allocates significantly to infrastructure development and provides incentives for rural housing, agriculture, and fisheries. The strategic decisions to enhance incentives for rural populace, particularly women, are expected to have a lasting positive impact, enhancing sentiments over the long term.” said Mohit Malhotra, CEO, Dabur.
Read more: Consumption sector wants a demand boost from interim budget
“The extension of healthcare coverage under Ayushman Bharat to ASHA and Anganwadi workers, and expansion of the 'Lakhpati Didi' scheme's target to 3 crore women are big positives this year, and will go a long way in empowering rural women and enhancing the quality of life in rural India, thereby ensuring sustained demand for branded consumer goods,” he added.
The finance minister emphasised the government's creation of numerous job opportunities through initiatives like Pradhan Mantri Matsya Sampada Yojana (PMMSY), expected to generate 55 lakh employment opportunities soon. The PMMSY has benefited 38 lakh farmers and generated 10 lakh jobs, while the Pradhan Mantri Formalisation of Micro Food Processing Enterprises Yojana has assisted 2.4 lakh Self-help Groups (SHGs) and sixty thousand individuals with credit linkages.
Read more: How Budget 2024 may boost consumer spending ‘indirectly'
“This year's budget creates opportunities for the FMCG sector to enhance infrastructure and improve distribution, facilitating a more extensive reach into the rural market. The sector is strategically poised to leverage the industry's potential, aiming to significantly strengthen the market share in these crucial areas.” said Mayank Shah, Vice-President, Parle Products.
The FMCG sector, especially in the food segment, was positively impacted by measures aimed at achieving self-sufficiency in oilseeds, said Roosevelt Dsouza, Head of Customer Success – India, NielsenIQ (NIQ).
“This could influence both edible oil prices and consumption trends. Initiatives providing free food for rural areas and employment opportunities have the potential to raise disposable incomes, leading to increased spending on non-essential products,” she added.
The focus on enhancing connectivity and infrastructure bodes well for India Inc including FMCG sector, commented Aasif Malbari, CFO, Godrej Consumer Products Limited (GCPL).
“Continuing the path of fiscal consolidation is a positive sign for overall economic growth, which has the potential to boost consumption patterns in the long run,” he said.
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