Ru­ral Fo­cus to Spur Con­sump­tion

FMCG sec­tor hope­ful en­hanced farm credit tar­get will boost hin­ter­land de­mand

The Economic Times - - Front Page -

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.

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