Budget 2022 Will Strengthen Foundation Of FMCG Sector For Long Term: Experts
With Prime Minister Narendra Modi led union government placing its bet on infrastructure development, the Indian fast-moving consumer goods (FMCG) sector is also hoping for a long term recovery from the shadows of the COVID-19 pandemic.
Talking about the union budget and boosting demand, as far as the FMCG sector is concerned, Akshay D'Souza, Chief of Growth and Insights, Bizom, a retail intelligence platform said, "An up capex of 35.4 per cent from Rs 5.54 lakh crore to Rs 7.5 lakh crore will boost direct and indirect employment. This will help enhance demand over the medium term. The government is mainly focussing on medium to longer-term measures rather than short term appeasement fixes to drive demand."
As per the experts from the sector, the Union Budget 2022-23 presented by the Finance Minister Nirmala Sitharaman has a few schemes which will help the FMCG industry, as far as enhancing consumption is concerned.
"The budget has fostered investments to fuel the economic recovery across different classes. It is meticulously balanced and is expected to drive FMCG demand across both rural and urban centres. Higher investments on programs to increase employment such as Gati Shakti, rural digital footprint improvement and infrastructure growth are growth engines," said Ashwani Arora, Executive Director at Market Xcel.
The budget by the government is also aiming to facilitate ease of doing business and enhance consumption by providing employment opportunities, boosting infrastructure, focusing on technology.
"Union budget 2022-23 is a strong one that takes a future-ready strong pro-technology, pro-business and green energy stand and estimates India’s GDP to grow at about 9.2 per cent, the highest among all great economies. It leverages the nation’s sturdy present position, and aims to expand it at an extremely macro level," said Director at Bikano, Bikanervala Foods, Manish Aggarwal.
D'Souza added that there is clearly the thought of bringing prosperity for the whole of India, connecting rural India strongly with the rest of the country, which is visible in the various allocations being done for rural India.
With regard to agriculture, Aggarwal said that the government is opening channels to boost chemical-free natural farming and leverage Kisan drones towards crop assessment, digitisation of land records and pesticides dissemination. There’s also the Rs 2.37 lakh crore worth of MSP direct payments set aside for wheat and paddy farmers that is a much-needed aid for farmers.
"Spends such as the PM Awas Yojana, PM Gram Sadak Yojana and MGNREGS will drive the rural economy by creating livelihoods and improving accessibility. MSP payment to 163 Lakh farmers and procurement of wheat and paddy will lead to over 2.37 lakh crore allocation to MSPs," added D'Souza, while talking about the rural economy.
"The directive to connect MSMEs such as Udyam, e-shram, NCS and Aseem portals will widen their scope much further and leverage them as portals with live organic databases providing G-C, B-C & B-B services such as credit facilitation, enhancing entrepreneurial opportunities," said Aggarwal.
D'Souza also mentioned that for FMCG companies, moving to direct distribution in rural India is becoming easier and by going in this direction, it will only get even simpler with time. He said, we also seen rural being the key pillar of growth in the short term and with these structural changes, we can see Bharat becoming the key growth pillar for India in the years ahead.
According to the experts, the main focus of the government is on driving consumption through indirect means. However, it will require rationalisation of high inflation through a reduction in prices of oil, fuel etc.
Aggarwal further said that the Gati Shakti plan is also a constructive plan to remedy the nation’s need for a world-class infrastructure and the PLI Scheme to generate at least 60 lakh new jobs over a 5-year period is another welcome move, after a couple of challenging economic years.
"We have an extremely positive outlook for the FMCG sector and welcome every step in that direction. Understanding consumer behaviour, we anticipate its positive and cascading impact at the last mile," said Arora.
"The ramp-up of capital expenditure by 35.40 per cent to Rs. 7.50 lakh crore as well as the upgrade to the credit guarantee trust for micro and small enterprises with the necessary fund injection, adding approximately an additional Rs. 2 lakh crore in MSME’s bounty, are signs of the government loosening their purse strings for the needy sector," added Aggarwal.
"Increase in allocation for MSP’s leading to higher MSPs will help ensure strong Agri produce. However, it does have the effect of taking inflation further up, especially in the Food processing industry, where it is a crucial input factor," said D'Souza.
"The launch of urban sector development plans for CoEs with an outlay of 250 crore, formulation of battery swapping policy and others are definitive moves on the part of the government towards progress in every direction and across all mediums. The one nation, one registration is a dream come true for business people while the directive to the private sector to seek sustainable business models for battery and energy as a service is a clear step in the green energy direction," said Aggarwal.
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