According to Shailaja Sharma of DNA, industry analysts are in two minds regarding the state of FMCG sector of rural India. Demand in rural India seems to have fallen significantly in the past year due to high food inflation, increase in prices of consumer goods, durables and vehicles, increased cultivation costs and reduced Minimum Support Prices (MSPs) of base-grade grains.  According to Emkay Global Financial Services, rural demand for FMCG is not performing well as income of rural people is plummeting. Amitabh Mall, Partner and Director at the Boston Consulting Group (BCG), however, says, “I do not see anything changing. There are fundamental drivers for growth in rural consumption, and they will continue to hold true for several years to come.” He substantiates his stand by highlighting points like – higher MSPs being offered to farmers, increasing amount of disposable income and innovations undertaken to prep up mobile vans and haats in rural India.

According to A. Mahendran, M.D. of Godrej Consumer Products says, “I am hearing the prediction (of rural growth slowing) but I do not buy that. When it comes to daily utilities like toilet soaps and other household items, consumption remains unaffected. In some discretionary categories, however, consumers could be cutting spends.” Industry data, however, indicates otherwise. Dabur, which earns about half its income from rural India, is exhibiting a slowdown and this trend is expected to continue in 2012. According to industry experts, price-sensitivity in rural India will prove to be the major cause behind decreasing demand for FMCG in rural India.