 "FMCG industry expects recovery in rural growth, consumer spending on track")
The FMCG industry expects the government's special focus on the agriculture sector in the Union Budget 2023-24 would help to regain rural growth while providing more disposable income to the middle class and reviving volume growth.
Terming the budget as "progressive and growth-oriented", leading FMCG companies such as Dabur, PepsiCo, Marico, Godrej Consumer, Mars, Wipro Enterprises, and Parle Products said, it has potential to revive the demand and propel long-term economic growth.
"It's a positive and favourable budget, with the government's emphasis on infrastructure, technology, and entrepreneurship boosting economic growth. On the other hand, farmer-centric programmes, last-mile connectivity, and digitisation will further contribute to the FMCG sector's multiplier effect," said PepsiCo India President Ahmed ElSheikh.
Dabur India CEO Mohit Malhotra said the proposal for a 33 per cent increase in overall capital expenditure outlay on infrastructure development will take India towards becoming a true global powerhouse and help urbanise the hinterland.
"The government's decision to set up a Rs 10,000 crore per year urban infrastructure development fund to be used for creating infrastructure in Tier-2 and Tier-3 cities will go a long way in boosting overall consumer confidence, and also help generate employment," he said.
A greater focus on agriculture with a new Agriculture Accelerator Fund being set up; extension of the concessional institutional credit through Kisan Credit Cards to animal husbandry and fisheries sector will provide the much-needed solutions to present-day challenges of farmers.
"It would also be highly beneficial for companies with a strong rural footprint and would help drive growth for the consumer products industry," he said.
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Wipro Enterprises CFO Raghav Swaminathan said this is a balanced budget focusing on consumption and capital expenditure, the two pillars driving economic recovery.
"The focus on the rural sector, with increases in agriculture credit, allocation of funds towards agri-based startups, and building up the supply chain on 'Shree Ann', augurs well for the FMCG industry, which could potentially boost rural consumption," he said.
Mars Wrigley India Country General Manager Kalpesh Parmar said Union Budget 2023-24 lays the foundation for clean and green growth while balancing the needs of the middle class through tax relief.
"This will boost consumption leading to more disposal incomes and consequent higher spending power with consumers. This will also push and revive demand growth in both urban and rural markets that will in turn drive the Indian economy," he said.
Emami Group Director Aditya V Agarwal said it is progressive, growth-oriented pro-people budget focussed on consumption growth, ease of doing business and capital outlays.
"The budget puts a certain boost to the agriculture, rural economy and infrastructure sector which will definitely have a positive impact on the economy and demand creation. The investments in the agro storage and other infrastructure will help the sector significantly," he said.
Marico MD & CEO Saugata Gupta said tax rebates will ensure more money in the hands of consumers, and he expects a boost in demand generation going forward.
"The budget has also addressed the supply chain challenges faced by farmers through the provision of the Agriculture Accelerator Fund. Additionally, the launch of national green hydrogen will aid in reducing the dependency on imports of fossil fuel and is a step towards Atmanirbhar Bharat," he said.
Parle Products Senior Category Head Krishnarao Buddha said budget seems to be a populist budget.
"Firstly, the direct tax revised slabs would mean higher disposable income, which will be good for the FMCG industry. Doubling of per capita income to almost Rs 2 lakh will again propel consumption and create increased demand. Focus on increasing farm income, focus on 5G app development are all progressive steps for the nation," he said.
Godrej group FMCG arm GCPL CFO Sameer Shah said that the rationalised tax slabs will be beneficial to Indian economy as it will increase consumers' disposable income.
"Furthermore, the proposed capital spends will boost consumption. Additionally, the focus on last mile connectivity and national infrastructure will strengthen the network in rural markets, providing a consumption boost," he said.
Namit Puri, Managing Director and Partner & leads Retail and FMCG for BCG India, said this budget focus addresses "prudent policies, supply side interventions and changes in the taxation structure that mitigate the impact of inflation, put more money in the hand of consumers and unlock consumption and arrest downtrading especially with the aspiring households."
It is also reviving rural demand by boosting disposable income, allocation to farm and higher fund allocation on rural infrastructure, connectivity, and mobility to create long-term jobs will aid growth in rural demand, he said.
Bikano Director Manish Aggarwal said: "This in turn is likely to give a boost to the FMCG sector including the food FMCG segment. While keeping macroeconomic stability in mind, the huge push on infrastructure with a capex allocation of Rs 10 Lakh crore including the food grain segment and the provision for decentralised storage capacity for farmers would not only spur the rural economy but also the broader economy.