Budget 2024: FMCG Firms, Retailers Expect Boost in Sales

By siliconindia  |  Wednesday, 24 July 2024, 10:44:07 AM IST

Budget 2024: FMCG Firms, Retailers Expect Boost in Sales
The proposals of tax relief and a focus on rural development in the 2024 Budget would bring about consumer spending, providing just the fillip that FMCG companies and retailers require with flat sales. The fact that disposable income due to deductions in taxes for salaried individuals and pensioners will increase may spur spending of a discretionary nature.
We expect consumers to spend more due to higher disposable income", said Saugata Gupta, MD & CEO of Marico. With a focus on infrastructure and employment generation, demand for FMCG products will increase significantly from the budget.
According to the Vice President of Parle Products, Mayank Shah, increased consumer spending would support the FMCG sector. Moreover, Godrej Consumer Products' CFO, Aasif Malbari, said that the rural development initiatives would pave the way for better consumption in non-metro markets and indirectly raise demand.
In a Bizom study, it was claimed that the top 75 cities with more than 500,000 population contribute 40% to FMCG revenues, with the remaining 60% coming from rural areas. Obviously, the focus in the budget on rural and infrastructure development is bound to see consumption grow in both areas.
Equally positive was the impact of the budget announcements on FMCG stocks on the BSE index, which rose 2.5 percent, the highest among sectoral indices, thus reflecting positive market sentiment.
Retail sectors that have earlier been hit by inflation, heatwaves, and reduced marriage dates are also likely to recover with an increase in consumer spending. According to Ramesh Kalyanaraman, executive director of Kalyan Jewellers, the new tax regime would favor demand for jewelry.
Swedish furniture and home décor retailer Ikea, too, is optimistic of better times in retail based on the budget's tax relief. "Certainly, the income tax relief announced in the budget would have a positive effect on retail consumption", said Murali Iyer, country CFO of Ikea India.
The skilling and employment incentives in this budget are bound to further support the creation of jobs in the economy", says Rajeev Singh, a partner at Deloitte Asia Pacific.

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