The Narendra Modi Government sought to give a marked thrust to the rural sector in this year’s Union Budget, its last full-year budget before the 2019 Lok Sabha polls, with the central ministries getting an allocation of Rs 14.34 lakh crore for creation of livelihood and infrastructure in rural areas.
India Inc on Thursday said the announcements were in line with expectations with emphasis on sectors like agriculture, health and infrastructure.
Anis Chakravarty, Partner and Lead Economist, Deloitte India said: “The latest budget represents prudent management as the focus clearly is on enhancing the health and overall status of the workforce. The stress on creating a budget that enables broader participation of the public has continued by giving a push to rural infrastructure along with trying to ensure that farmers get the right price for their produce. The focus on infrastructure creation continues and bodes well for the overall growth momentum in the economy. The decision to give higher MSPs (minimum support price) is clearly a positive for the agriculture sector though it could lead to some inflationary pressures building up in the system.”
The Budget has delivered on the BJP government’s development agenda of enhancing the rural economy and doubling the farmer’s income. This boost to the underprivileged – providing higher income for farmers – will bode well for consumer goods companies.
Vivek Gambhir, Managing Director and CEO, Godrej Consumer Products Limited said: “This aam aadmi rural focused budget to build ‘New India’, reinforces the Government’s pro-inclusivity, pro-growth, pro-reform agenda. It is largely positive for FMCG; proactive efforts to drive demand and increase consumption should revive growth. Over the last couple of months, as GST implementation is settling down, we are seeing FMCG growth come back on track and these initiatives will provide an additional fillip, especially to rural. However, the need of the hour is to ensure that these initiatives get translated into tangible results through faster implementation and better on-ground execution.”
“Improving income of agriculturists through initiatives such as MSP at 1.5 times the cost of produce, and Kisan Credit Cards for fisheries and animal husbandry, will help put more money in the hands of people in rural areas. Accelerating rural infrastructure projects will improve connectivity and thereby FMCG distribution networks. We hope to see much-needed job creation from increased infrastructure investments of 50 lakh crore rupees, boost to MSME and focus on skilling and education. Investments in women and child development and the potentially transformative introduction of a flagship National Health Protection Scheme will drive more inclusive growth. The standard deduction of 40,000 rupees for salaried tax payers will increase disposable income for the middle class and drive demand for mass products,” he added.
He had added that demand in rural areas for FMCG products has been quite good over the last year and that with inputs costs being reasonably under control, he did not see much price increase in the FMCG sector, which would bolster demand in the hinterland.
Apart from this, there seems to be not much of an immediate impact on the retail sector – positive or negative.
Kumar Rajagopalan, CEO, Retailers Association of India said: “Agriculture, infrastructure, healthcare and rural development seem to be the key focus areas of the Budget 2018. We do not expect any immediate impact on consumption, either negative or positive. There is no real additional money in the hands of the middle class with which consumption can improve. However, the basic necessities of the poor in the country will be met because of the various schemes announced. The proposed reduction in corporate tax to 25 percent for MSME (medium, small & micro enterprises) companies with turnover up to Rs 250 crore is a welcome move, which will benefit a large number of retailers. They will be able to save on taxes that they would have otherwise paid at a higher rate. Overall, the budget is pro-poor, and one with a long-term impact with no immediate benefits for retail sector.”
(With inputs from IANS)