Home >Opinion >Quick Edit >Opinion | Who moved my biscuit?

Parle Products Pvt Ltd., India’s largest manufacturer of biscuits, has threatened to eliminate about 10,000 jobs as a deepening economic slowdown begins to bite. The 5 value packs of Parle-G glucose biscuits, which are highly popular among low-income rural consumers, are on a sales downslide. Parle’s rival Britannia Industries, too, is experiencing the effects of weakening demand, though less severely. That’s because Britannia’s products portfolio is mostly in the premium space. By contrast, Parle’s offerings are overwhelmingly aimed at people at the lower levels of India’s socioeconomic pyramid, mainly in the countryside where real rural wage growth declined for 33 months between May 2014 and May 2019.

The month-on-month fall in sales of automobiles since July 2018 was evidence enough that the economy was undergoing a painful slowdown. However, when items as quotidian as cheap biscuit packs fail to find buyers, it suggests that something profound has happened with consumption demand. And that the government urgently needs to take steps to reverse the trend. Parle complains that biscuits priced at 100 per kg attract a GST of 18%, compared to zero excise duty before the new indirect tax regime came into effect in 2017. This prompted the company to initiate price hikes, which further depressed sales.

Poor purchasing power in rural India persists despite an increase in minimum support prices for farm products and a cash transfer scheme rolled out just before the general elections this year. Falling consumption of small packaged goods, some believe, is consistent with a wider story of people having fallen on hard times.

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