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Budget 2017: FMCG players expect the Govt to enhance rural spending, rip taxes

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Government’s move to enhance rural spending through welfare schemes like MGNREGA and reduction in tax rate on basic income slab would help drive demand for products, say leading FMCG firms.
PTI quoted Managing Director, Godrej Consumer Products Ltd (GCPL), Vivek Gambhir as saying, “the reduction in tax slab would leave more money with the consumer to spend and would increase the demand.”
“It is largely positive for the FMCG sector, given the strong emphasis on rural stimuli. Focused efforts to boost the agrarian economy and improve agricultural productivity, increased investments in MGNREGA, should augur well for rural consumers,” he said.
Gambhir further told PTI: “The reduction of direct tax for individuals earning less than 5 lakh too will increase disposable income and drive demand for mass products.”
PTI recorded that according to Managing Director & CEO of Marico, Saugata Gupta, “the Government increase in spending in rural areas and infrastructure would boost the demand.”
“The Budget is forward looking, consistent and pragmatic with overall focus on broad-based growth. We expect it to boost consumption, create more jobs especially in the rural and infra sector, given the thrust provided by the Government to agriculture, MNREGA, infrastructure and rural productivity,” he said
Joint Managing Director at Jyothy Labs, Ullas Kamath also told PTI that the Union Budget has laid lot of emphasis on middle-class and rural population.
“We see substantial demand emerging from tier II & III cities, as the Government focuses on enhancing agriculture income, personal hygiene and sanitation. The focus on digital payment will increasingly shift consumers towards organised players,” he said.
As per PTI, CEO of Dabur, Sunil Duggal too said, “Government’s decision to enhance allocation to MNREGA to Rs 48,000 crore would generate demand from rural corners.”
“These, coupled with the skill development initiative, would not just strengthen the hands of the rural poor, but also help put more disposable income in the pockets of the rural consumer and ensure continued rural demand for branded consumer goods,” he said.
According to Country President at Henkel India, Shilip Kumar, more spending on infra project would boost demand in adhesive segment said PTI.
“The increased thrust to infrastructure is a positive development for adhesive, sealant and functional coating manufacturers like Henkel,” he said.
Director at Videocon, Anirudh Dhoot told PTI that high disposable income as a result of lower tax rates will lead to higher purchasing power of the individuals. “This will lead to increase in demand of consumer goods.”
Focus on digitization and reforms on restricting cash spending is an important step towards making India a digital economy, Co-Founder of Micromax Informatics, Rajesh Agarwal told PTI.
Further adding, “Boosting more demand and upbringing rural economy will further give rise to public spending which will show results in the long run.”
India & South Asia President & CEO of Panasonic, Manish Sharma told PTI that a lot of impetus has gone to rural economy and allocation on infrastructure by the Government would help in future.

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