FMCG Sector Urges Digital Investments in Union Budget

The FMCG and retail sector calls for investments in digital infrastructure, skill development, and MSME promotion in the next union budget to boost consumption and spending. This, along with targeted initiatives in rural and urban areas, could drive economic recovery, according to an Axis Securities report.

In a bid to boost economic recovery, the fast-moving consumer goods (FMCG) and retail sector has urged the government to focus on digital infrastructure, skill development, and MSME promotion in the forthcoming union budget. A report from Axis Securities highlights the crucial role these investments play in reigniting consumption, particularly in rural parts of the country.

The report emphasizes that targeted efforts in job creation and improved farm and non-farm incomes are vital for reviving the rural economy. Coupled with increased allocations under the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) and various government incentives, these strategies are expected to enhance rural purchasing power. A significant push for capital expenditure on rural infrastructure and connectivity is also deemed essential for demand stimulation in underserved regions.

Urban areas, too, must not be overlooked, the report stresses, advocating for enhanced funding of urban development projects and the services sector. This could potentially create employment opportunities and increase urban demand. Furthermore, a revision of income tax slabs has been suggested to elevate disposable income, thereby boosting consumer demand across different economic strata.

However, the sector strongly advises against raising excise duties or the National Calamity Contingent Duty (NCCD) on cigarettes and tobacco products. Such measures, they argue, could adversely affect cigarette manufacturers. The report also underscores the need for heightened rural expenditure to aid vulnerable populations, with particular emphasis on relief through food and fertilizer subsidies and increased focus on affordable housing. These initiatives, if reflected in the union budget, could bolster demand and promote sustainable growth in both the FMCG sector and the broader economy.

(With inputs from agencies.)