“More money is needed in the hands of people in rural areas. We will have to see what the situation is when the kharif crops are harvested,” said the Marico Chairman
The upcoming harvest season (kharif) will be a critical factor as the economy, especially FMCG companies, hope for a change in sentiment among rural consumers, said Harsh Mariwala.
Agreeing that rural spending is important for overall consumer spend in the country to improve, the Chairman of leading consumer goods company Marico said in an interview to Moneycontrol, "More money is needed in the hands of people in rural areas. We will have to see what the situation is when the crops are harvested."
Harvest of kharif crops begins once the monsoon retreats. But with rains extending their presence in the country this year, opinions are varied on the impact on crops.
While floods and intense rains may have impacted standing crops, the extended rains in October, when the harvesting usually begins, may have caused additional damage.
At the same time, the additional rains may benefit crops in the rabi season, which plays out during the winter.
A good kharif harvest will lift sentiment, and also leave money in the hands of rural consumers. This is important as for the first time in seven years, the rural market grew slower than its urban counterpart in the July-September period.
Rural markets are important for FMCG companies. For many of them, 45 percent of the product basket is focused on consumers in villages and towns.Beyond corporate tax cut
While the corporate tax cut has helped companies, Mariwala said more initiatives are needed to revive the economy.
When it comes to consumers, the veteran entrepreneur added, it is about purchasing power. "A similar cut in personal tax would have boosted (purchasing power). But government doesn't have the fiscal freedom to do it," he said.
The businessman pushed for more structural reforms, including those on labour and land, which could help in the long term.
"The Indian industry, in the context of the global environment, is not as competitive as it should be. There are structural deficiencies and bottlenecks. We need reforms in judiciary (in terms of delay), labour and land. Freight (rate) is also high," Mariwala quipped.Entrepreneurship is lonelyTalking about entrepreneurship, Mariwala, who also heads the Ascent Foundation, said that it is often lonely at the top.
Talking on the context of the demise of CCD founder VG Siddhartha, Mariwala said: "You are the owner but can't share issues with the team. You need other individuals that can understand. Families empathise, but don’t understand as they do not have a business background."
That is why it is important to have a platform like Ascent Foundation for entrepreneurs to exchange thoughts, ideas and also support each other, Mariwala added.
Mariwala had founded Ascent Foundation in 2012, to help entrepreneurs learn from each other’s experience. "A platform like Ascent provides empathy and understanding of what a CEO would be facing. When one entrepreneur talks about his problems, others too share their issues. So, no one stands out," he explained.
After starting off in Mumbai, the Foundation opened its Chennai chapter in 2018. "In Mumbai, we have 460 members, and 60 in Chennai. We should be touching 100 in Chennai by March 2020," he said. In Mumbai, the Foundation is looking to have 500 members.Up next is the Foundation's annual event, Ascent Conclave, in November. The day-long event will see participation of 600 entrepreneurs. "The theme this year is Rewiring for Resilience. And given the economic circumstances it will have relevance," said Mariwala.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.