Budget steps may not lift rural consumption soon -Ratna Bhushan & Sagar Malviya
-The Economic Times
NEW DELHI | MUMBAI: The government's spending in the budget aimed at bolstering rural development and providing higher income for farmers has not increased significantly and it may take at least two quarters to drive growth in the hinterland, consumer goods companies said.
More than a third of daily-use branded products are sold in the rural areas, home to about 800 million people, whose purchasing behaviour depends on farm output.
"We don't see this as a game-changer for consumption in rural markets and don't expect sustained results before the second quarter of the next fiscal," Dabur India's chief executive officer Sunil Duggal said. The rural markets contribute close to half of Dabur's Rs 7,800-crore turnover.
"We are seeing green shoots of recovery in rural markets but we expect it will take about two quarters for growth to accelerate," said Saugata Gupta, managing director of Marico, the maker of Parachute hair care oil and Saffola cooking oil.
Finance minister Arun Jaitley's measures this year include a minimum support price (MSP) for crops of at least 1.5 times the cost of production, liberalisation of agricultural exports, increase of institutional credit for the agriculture sector, doubling of allocation for food processing and health protection coverage of Rs 5 lakh for 100 million poor and vulnerable families.
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