Home / Budget / Budget Expectations /  Union Budget 2023: What the FMCG sector expects from FM Sitharaman?

The unmissable Union Budget 2023–2024 will be presented in Parliament in February 2023 by Union Finance Minister Nirmala Sitharaman. This budget is receiving a lot of attention from many industries because it will be the last complete budget before the general elections in 2024. Fast-moving consumer goods (FMCG) saw a significant inflationary impact in the first half of the year; however, with inflation moderating internationally as a result of stable commodity prices, what are the prebudget forecasts for the FMCG sector? Let's find out from our experts in the field.

Vincent K A, Research analyst at Geojit Financial Services said “The need of the hour is to support farmers due to elevated inflation, and hence there is a high expectation of a higher allocation for rural development in this budget. The allocation for FY23 was Rs.1.35 trillion, but it has already been spent Rs.1.55 trillion. Rural demand is important for overall growth, as rural India accounts for about 65% of the population. Being a pre-election budget, the usual contemplation is that it will be populist. We can expect measures like increasing MSP (Minimum Support Prices), expansion of warehousing, micro irrigation, and credit growth, increasing the revenue of the rural market. Other instruments we can expect is an increase in the allocation of schemes like Prime Minister Awas, Ujjwala and Saubhagya Yojana schemes, indirectly improving the standard of rural economy. Further, steps on rationalization of tax slabs or an increase in tax exemption are positive for FMCG/Retail companies by increasing the disposable income of consumers. We do not anticipate any changes in the GST rate in the budget."

Mr. B Gopkumar, MD & CEO, Axis Securities said “As this is the last full-year Budget before the Union Election in 2024, we expect it to be growth-oriented. The primary focus of the Budget is likely to be on job creation and investment-driven growth. The real estate sector may get a boost with some announcements to expand the current income tax benefit for housing. Measures to stimulate rural spending and infrastructure development would be the highlight in the Budget. Any roadmap to build and bolster the entrepreneurship culture can promote self-reliance and go a long way in employment generation. Overall, with its focus on growth and development, this Budget may have something for everyone. FMCG, Manufacturing, MSME, and Banking are a few sectors that may see action."

Anirudh A Damani, founder – Artha Group said “There was a spike in inflation due to supply chain issues with an increase in fuel costs in 2022. Couple that with the dual effects of RBI’s rate hikes which increased interest pay-outs for borrowers reducing disposable incomes. Besides, the higher interest rates also encouraged savings as FD rates started returning to pre-COVID levels, which prompted the rural consumer to delay consumption. However, with inflation easing globally due to fuel price stability, I see demand improving in the latter half of 2023. The central bank should change its stance of reducing inflation at the cost of growth, and any indication that it will loosen its tight grip will be positive. The recent December data shows a sequential increase in demand, and I believe that, barring a black swan event, the trend is generally positive for a pick-up in rural demand."

Mr Manas Madhu, Co Founder, Beyond Snack said “The FMCG sector's growth trajectory and consumer demand trends are closely connected. When customers have more disposable income, voluntary spending and sales of fast-moving consumer goods (FMCG) rise. The government should consider lowering personal income tax rates in its upcoming push for reform, as this would raise disposable income levels and stimulate the demand cycle. The government has already asserted that the goal of the upcoming budget is to maintain India's current rate of economic growth. The FMCG sector has recognised the potential of rural demand, and now is the ideal time to inject additional capital investment to boost supply-chain efficiency at the local level. With the rise of digital and remote work, people's desire for snacks has increased despite their efforts to reduce their household spending. Our growth-driving strategy in 2023 will centre on innovation, the prioritisation of profitable sales channels, and the diligent management of stock-keeping units."

Shauravi Malik and Meghana Narayan, Co-Founders, Wholsum Foods said “As consumers become increasingly health-conscious and the government continues to put the spotlight on the grain, we are confident that the market for millet-based products will only grow exponentially. The government's action plan in recent times to boost the export of millets and value-added products containing the grain are a welcome move. As a company that has a single-minded mission of bringing millets to the center of all plates, we're thrilled to see the spotlight being put back on the ancient Indian supergrain. We have already seen demand pique for the grain in the international markets where our products are available, including the USA, Europe, UAE and Singapore. With 2023 designated as the International Year of Millets and the Government's thrust on export, we hope to see more focus on promoting coarse grain. It’s an exciting time for millets and we’re proud to do our part in taking these supergrains to the world!."


Vipul Das

Vipul Das is a Digital Business Content Producer at Livemint. He previously worked for Goodreturns.in (OneIndia News) and has over 5 years of expertise in the finance and business sector. Stocks, mutual funds, personal finance, tax, and banking are among his specialties, and he is a professional in industry research and business reporting. He received his bachelor's degree from Dr. CV Raman University and also have completed Diploma in Journalism and Mass Communication (DJMC).
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