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Rural demand for fast-moving consumer goods (FMCG) is expected to witness a revival over the next six months on expectations of a bumper rabi crop, however, announcements made in the budget are expected to further boost demand in the hinterlands over a period of time.
Schemes like the Lakhpati Didi, PM Awas Yojana and the PM Mudra Loans will help in boosting rural consumption, but over a period of time, executives of consumer companies said.
“The Budget is positive for rural consumption over a five-year horizon. The next six months, however, will depend on how the rabi crop shapes up and if the harvest is good, the demand will definitely pick up,” Angshu Mallick, managing director and chief executive officer at Adani Wilmar, told Business Standard.
Mallick said wheat and mustard are expected to be bumper crops, provided there are no unseasonal rains from February 15 to March 15.
Mayank Shah, senior category head at Parle Products echoed similar sentiments.
“The acreage this rabi season has gone up and this will benefit. However, the announcements in the budget will cause demand to pick up but over a period of time. With the announcements made in the budget which will encourage employment and also the higher amount allocated to capital expenditure will cause employment and yield results in the long-run,” Shah explained.
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Mallick noted that the upcoming elections will cause demand to increase in rural areas as spending during campaigns pushes for consumption as gatherings typically take place which causes at least higher consumption of foods.
Vimal Pande, the chief executive officer at the country's largest shaving cream company, Vi-John, said at present, there is a liquidity crunch in the market and some revival will be seen once the rabi crop is harvested.
Pande believes consumers will continue to remain tight-fisted till the elections.
“Rural markets aren’t doing well right now, but the rabi crop harvest will give some relief to the stress currently seen in the market,” he said.
Roosevelt Dsouza, head of customer success at NielsenIQ (NIQ), a market research firm, said, the emphasis on improved living standards through initiatives in housing, education, tourism, and loan schemes underscores a dedicated focus on consumer and industrial upliftment.
“The substantial increase in capital expenditure is poised to enhance existing infrastructure, stimulating production and generating employment opportunities in urban and rural India,” he added.
