Rural Focus to Spur Consumption
FMCG sector hopeful enhanced farm credit target will boost hinterland demand
Sagar Malviya & Ratna Bhushan Mumbai | New Delhi: With an eye on reviving consumption in the hinterland, the finance minister has rolled out several sops for low-income and rural consumers. The farm credit target has been increased by ₹ 1 lakh crore to ₹ 10 lakh crore to increase credit flow to the agriculture sector. Rural growth decelerated to lower single digits last year from the midteens in 2014-15. The total allocation of ₹ 1.87 lakh crore for the rural and allied sectors is an increase of 24% over the previous year. Consumer companies are hopeful that additional money in the hands of people will boost consumption and revive demand. Rural markets have nearly 64% of all retail stores but account for just a third of fast-moving consumer goods (FMCG) sales in the country, according to Nielsen.
A reduction in the tax liability of those with an income below ₹ 5 lakh will also help to boost non-urban demand. “The tax incentive should improve penetrationandconsumptionofaffordable,small unitpacks,”saidVivekGambhir,managingdirector,GodrejConsumerProducts.