Budget 2017: Rural focus to spur consumption

MUMBAI | NEW DELHI: With an eye on reviving consumption in the hinterland, the finance minister has rolled out several sops for low-income and rural consumers.

The farm credit target has been increased by Rs 1 lakh crore to Rs 10 lakh crore to increase credit flow to the agriculture sector.

Rural growth decelerated to lower single digits last year from the midteens in 2014-15. The total allocation of Rs 1.87 lakh crore for the rural and allied sectors is an increase of 24% over the previous year.

Consumer companies are hopeful that additional money in the hands of people will boost consumption and revive demand. Rural markets have nearly 64% of all retail stores but account for just a third of fast-moving consumer goods (FMCG) sales in the country, according to Nielsen.

A reduction in the tax liability of those with an income below Rs 5 lakh will also help to boost non-urban demand. “The tax incentive should improve penetration and consumption of affordable, small unit packs,” said Vivek Gambhir, managing director, Godrej Consumer ProductsBSE -1.57 %.

Source: ECONOMIC TIMES