Farm package to boost rural economy, benefit FMCG companies
For the past few months, the surge in agribusiness and rural sales has been the driving factor of the future growth potential of FMCG businesses in India. Rural contributes 35-40 percent of overall sales value.
May 14, 2020 / 09:28 PM IST
Fast moving consumer goods (FMCG) companies are likely to reap the benefits of Finance Minister Nirmala Sitharaman's recently announced measures to alleviate the hardships caused to farmers due to the novel coronavirus, or COVID-19 lockdown.
Experts told Moneycontrol that the measures announced will have a multiplier effect across the FMCG value chain.
Anil Talreja, Partner and Leader Consumer Business, Deloittee said, "The extension of the interest subvention scheme along with the Rs 30,000 crore additional working capital funding for farmers will ensure that the farming community, especially the marginal farmers, are able to fund their crop-related expenditure for the upcoming kharif season.
He feels the measures will lead to additional earnings to the farming community due to increased government procurement. "Over and above this, the measures announce for migrant workers like affordable rental housing and free foodgrain supply will prevent the exodus of such workers who are an essential cog in the whole supply chain right from farm to the fork. These migrant workers form the backbone of both the rural economy as well as the FMCG manufacturing ecosystem.
Brokerage houses too feel that the benefit given to farmers will leave more money in their hands to spend, help boost the rural economy and in turn benefit FMCG firms.
After announcing the first tranche of measures under the atmanirbhar initiative, Sitharaman on May 14 unveiled the next set of measures to alleviate the hardships caused to farmers, migrant workers and street vendors due to the coronavirus-induced lockdown restrictions.
For the past few months, the surge in agribusiness and rural sales has been the driving factor of the future growth potential of FMCG businesses in India. Rural contributes 35-40 percent of overall sales value. About 65 percent of Indians live in villages and small towns.
Sitharaman said a special drive to provide concessional credit to PM-Kisan beneficiaries will be undertaken. The Rs 2 lakh crore concessional credit will be extended to 2.5 crore farmers who don't have the card. Fisherman and animal husbandry workers will also be included.
Interest subvention scheme on farmer loans at concessional rates has also been extended until May 31, 2020.