Higher MSP allocation will boost consumption in rural markets: FMCG makers


Higher minimum support prices for farmers will help boost consumption of fast-moving goods in the hinterland, while improved government spending will create a multiplier effect on growth, major authorities said on Tuesday. consumer companies, describing the Union’s budget as “futuristic” and “focused on growth”. “.

With an unexpected increase in capital investment, putting more money in the pockets of farmers and a continued focus on infrastructure development, it takes the much-needed investment path to boost the country’s long-term economic growth, said Mohit Malhotra, CEO of Dabur India Ltd. in a report.



In the 2022-23 budget, Finance Minister Nirmala Sitharaman has earmarked Rs 2.37 lakh crore worth of direct MSP (minimum support price) payments to wheat and paddy farmers, financial support for agroforestry and the promotion of natural products without chemicals. Agriculture.

“The higher MSP allocation would go a long way in boosting the consumption of FMCG products in the hinterland. This would be very beneficial for companies with a large rural footprint and would help drive the growth of the consumer products industry” , said Malhotra.

However, Mayank Shah, senior category manager at Parle Products, said MSP’s increased allocation will also have an impact on inflation.

“It is also going to have an impact on inflation because if you increase the MSP, it will end up increasing the cost of agricultural products, primary inputs in food processing. So purchases will increase. The current challenge facing the Most FMCG companies, which manage inflation, would likely be made worse, he said.

However, ITC President Sanjiv Puri said the budget contains “innovative measures” and addresses key issues of generating livelihoods, improving farmers’ incomes and building resilience. climatic.

“The substantial increase in public spending will create a multiplier effect on growth and competitiveness. FPOs, will transform the agricultural sector,” he said. noted.

PepsiCo India Chairman Ahmed ElSheikh said the budget reflected the government’s aim to revive economic growth, increase consumption and foster investment to fuel post-pandemic growth.

Stating that the government is leading the charge in increasing public sector spending to keep the economic recovery on track, he said that “digitalization combined with the creation of infrastructure will accelerate economic development, boost innovation and growth. entrepreneurial spirit, will improve the standard of living while keeping sustainability at the heart.”

Nearly 35% of FMCG sales come from rural areas and after the second wave they were hit hard. In recent October-December results, several FMCG companies such as HUL and Marico reported lower sales volume in rural markets.

Emami director Harsha V Agarwal called the budget “forward-looking” with a focus on capital spending, which is expected to spur growth.

“Ease of doing business in India has also been a priority, so overall the budget holds no surprises and is focused on growing the Indian economy,” he said.

Mars Wrigley, India’s managing director, Kalpesh Parmar, said it would boost the development of both rural and urban markets.

“The increase in the provision allocated to the Rural Infrastructure Development Fund will have a positive impact on increasing rural employment and ultimately consumption through higher disposable incomes.

“We appreciate the government for taking comprehensive plans to switch to green energy as well as the steps the government has taken to make it easier to do business in India,” he said.

BL Agro Chairman Ghanshyam Khandelwal hailed the government’s decision to adopt a streamlined strategy aimed at improving domestic oilseed production and minimizing dependence on imports.

“A more promising statement was the package which focuses on farmers adopting appropriate fruit and vegetables, as well as good harvesting practices. This move will go a long way in elevating the food processing sector,” he said. he declares.

Tata Consumer Soulfull welcomed the Finance Minister’s announcement to declare 2022-23 as the “International Year of Millet” on the back of the UN’s declaration of 2022-23 as the “International Year of Millet”.

“India is one of the biggest producers of millet and it is a healthy and sustainable food choice,” said Prashant Parameswaran, MD and CEO of Tata Consumer Soulfull.

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)