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Business News/ Companies / News/  FMCG firms eye revival as sops put more cash in people’s hands
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FMCG firms eye revival as sops put more cash in people’s hands

The finance minister’s announcements to lower TDS and TCS will boost liquidity and spur spending, say industry watchers
  • It was encouraging to see the details of the stimulus, says Simon George, president at Cargill India
  • Photo: HTPremium
    Photo: HT

    NEW DELHI : Consumer product companies are hoping that steps announced on Wednesday by finance minister Nirmala Sitharaman will generate demand by putting more money in the hands of consumers through cuts in the tax deducted at source (TDS) and contribution towards Employees’ Provident Fund (EPF).

    Sitharaman offered relief to the average consumer by cutting TDS for non-salaried employees by 25% of the existing rates. This, she said, will put 50,000 crore in the hands of these people.

    The government also sought to put more cash in the hands of consumers by lowering their EPF contribution to boost take home pay. The Union government reduced the statutory EPF deductions for employers and employees to a total of 20% for the next three months. This will benefit around 650,000 companies and their employees. Currently, employees and employers deposit 12% each of the basic salary and housing allowances as EPF every month. The move will thus reduce the employee cost for employers and give employees 2% more take home pay.

    It was encouraging to see the details of the stimulus, said Simon George, president at Cargill India, a fast moving consumer goods (FMCG) firm.

    “We can see a two-pronged initiative from the government, addressing both the demand and supply sides simultaneously to revive the economy. On the demand side, reduction in PF contribution and tax cuts for non-salaried professionals will put more cash in the hands of end consumers. This should trigger a demand surge," he said.

    The FMCG sector wants demand to revive as soon as possible, said Angshu Mallick, deputy chief executive officer, Adani Wilmar Ltd, a packaged foods company.

    “The finance minister’s announcements to lower TDS and TCS will boost liquidity and leave more money in the hands of people. This will spur spending, which is the need of the hour to revive demand and economic activity," he said.

    On the supply side, George said support announced for MSMEs is a positive step.

    shuchi.b@livemint.com

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    Published: 14 May 2020, 12:59 AM IST
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