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Last Updated : May 24, 2019 07:55 PM IST | Source:

Modi 2.0: India Inc says need of the hour to step up rural consumption

Investors are concerned with the weak commentary given by the management of consumption driven sectors like auto, paints and FMCG. Management indicated a rural slowdown is underway.

Himadri Buch @himadribuch

After a thumping majority in the recently concluded Lok Sabha elections, a herculean challenge lies ahead for the Modi-led BJP government.

While the first five years of the government were dominated by social welfare projects (such as housing, roads, toilets, and financial inclusion), in the coming five years, challenges associated with rural consumption slowdown (as expressed by India Inc) will be high on the priority list. This would be in addition to other major issues such as capex revival and financial reforms.

Investors are concerned with the weak commentary given by the management of consumption driven sectors like auto, paints and FMCG, and indicated that a rural slowdown is underway.


Applauding Modi’s victor, Pawan Goenka, Managing Director, Mahindra & Mahindra said, “What has to happen immediately is get consumption going,”

Nilesh Shah, Managing Director and Chief Executive Officer, Kotak Mutual Fund, said, “Market believes the stage is set for accelerating growth to a higher level by tackling certain challenges like revival of investment and support consumption growth.”

Kiran Mazumdar-Shaw, Chairperson, and Managing Director, Biocon pointed out that agrarian stress has been highlighted throughout these elections as a blot on the Indian economy.

“NDA  2.0 must focus on innovative policies to create viable and sustainable farming models," she said adding that FPOs (Food Processing Projects) are the best co-operative farming models available to provide equity to farmers, which can also be leveraged to create value-added agriculture through FPOs.

Corporate honchos mentioned that welfare funding programs like MNREGA, which aims to assure ‘part employment’ to unskilled labour for a certain part of the year, have fallen short of creating viable economic equity.  The same funds needs to be directed to FPOs and micro entrepreneurial clusters that can boost our rural economy.

Fund managers and companies expect the Modi-led government to take immediate measures to revive consumption, address the financial sector's dislocation by recapitalising state-run banks and boost manufacturing sector to ensure job creation.

Taher Badshah, CIO, Invesco MF said the bigger task ahead of Modi government will be to address some immediate issues like solving NBFCs liquidity issues and depression of consumption demand in rural areas.

Manish Sonthalia at Motilal AMC said some of the rural schemes particularly for farmers need to be boosted to revive consumption, banks need to be recapitalized along with boosting real estate sector.


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First Published on May 24, 2019 07:55 pm
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