In the run-up to interim Budget 2019, consumer goods companies are looking for a greater thrust on rural allocation and sops in the agri-sector to help boost the overall consumption in India.

Demonetisation as well as the implementation of GST impacted spending power of the middle class and the rural sector in the last two years, according to market experts.

Weak macroeconomic indicators have further compounded their worries. Insufficient rainfall in some pockets and sluggish wage growth have negatively impacted growth in rural areas in the last couple of years.

About 65 percent of Indians live in villages and small towns. This demographic, the biggest market for India’s consumer companies, is now dependent on the government’s generosity for a sustained demand recovery.

"I believe there is scope for improvement in overall growth rates. It’s important to get volume growth back to 2012-2013 levels. The interim budget should help provide relief to the farming sector and the middle class," said Saugata Gupta, MD of Marico.

The timely execution of rural schemes can help benefits trickle down to the farming community. While the government has been supporting the agri-sector through initiatives like MGNREGA, increasing the minimum support price for select crops, focusing on electrification of villages, the industry feels a lot still remains to be done.

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The FMCG companies are hoping that the interim Budget would provide additional support, in terms of extending financing, farm credit and providing loan interest waivers.

In a bid to boost rural consumption, the FMCG industry has introduced smaller SKUs (stock keeping units) and affordable packs across product categories.

The retail industry is also hoping that it would be beneficial for the industry, if “more money is brought back in the hands of the consumer, " according to Kumar Rajagopalan, CEO of Retailers Association of India.

“We are hoping that the budget brings about a consumption boost and respite for the middle class segment. Providing GST refunds to foreign tourists could also help increase spends on shopping,” said Rajagopalan.

Rajagopalan is also hoping that the government would address the issue of discrimination in taxation rates for branded and unbranded food products.

First Published:Jan 30, 2019 1:22 PM IST