Union Budget 2024: FMCG sector calls for measures to boost rural demand
PTC News Desk: The FMCG sector anticipates the next Union Budget 2024 to include measures to increase consumption in rural areas.
In the first quarter of CY2024, businesses in the fast-moving consumer goods (FMCG) sector noticed signs of a revival in rural demand. After trailing the previous quarter, rural demand exceeded urban consumption in the January–March quarter.
The sectoral NIFTY FMCG index has increased by about 13 per cent over the last three months, indicating that FMCG firms have recently gained attention due to the revival in demand.
Aiming to improve rural jobs, agricultural infrastructure, and farmers’ income, consumer products makers and suppliers anticipate measures to be included in Finance Minister Nirmala Sitharaman’s Full Budget for FY 2024–2025.
The FMCG industry has the following major expectations from the first Budget of the Modi 3.0 government.
Steps to promote inclusive growth
FMCG companies look for budgetary announcements that will promote inclusive growth in the nation’s rural areas. Improved infrastructure, including industry and agricultural investments, transportation networks, and rural infrastructure would support inclusive growth, which would raise consumption.
Booster for rural consumption via MGNREGA
The FMCG industry will also support initiatives that put more money in the hands of customers through rural work schemes like MGNREGA and concentrate on creating jobs in rural areas. Demand would be stimulated by increased funding for MGNREGA and direct benefit transfer programmes for residents of rural areas.
The Interim Budget in February included Rs 86,000 crore for MGNREGA, the same amount as the revised estimates for FY24, according to Finance Minister Nirmala Sitharaman. The FMCG industry anticipates a larger budget for the rural employment programme.
Lower inflation
One of the main demands of the FMCG sector is steps to stimulate the rural economy through increased expenditure while controlling inflation. The demand for FMCG companies in rural markets has increased thanks to lower commodity costs.
According to recent data, retail inflation in June 2024 will be above the RBI’s tolerance level of 4 per cent, with wholesale inflation rising to a 16-month high of 3.36 per cent.
Push for manufacturing
FMCG companies anticipate quicker PLI scheme payouts to stimulate the manufacturing sector, which will fuel demand in rural areas. According to specialists in the FMCG sector, easy financing for MSMEs and the development of strong supply chains in rural areas will also be advantageous for the rural economy and employment generation.
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Address farmers’ challenges
FMCG companies anticipate that the budget will include measures to address the different issues that farmers face. Farmers’ steady incomes are being threatened by climate change. Farmers would be better protected from the negative effects of unfavourable weather conditions on crop yield by an efficient crop insurance program. FMCG companies would anticipate the construction of storage facilities to minimize agricultural waste, improved irrigation systems, and increased funding for rural infrastructure.
Additionally, farmers are having to deal with increased labour, seed, and fertiliser costs, which is lowering their income levels. Announcements that encourage the manufacture of safe, chemical-free food are likewise anticipated by the consumer products industry.
The attention has shifted to the rural markets due to the recent upsurge in demand. Electrification, improved infrastructure, and digital connectivity—which improved rural outreach and direct distribution—led the demand resurgence.
Also Read: Union Budget 2024: 5 key expectations in the changing market dynamics