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Job creation, lower taxes, fiscal stimulus, fast-track reforms: Consumer companies’ Budget demand

Job creation, lower taxes, fiscal stimulus, fast-track reforms: Consumer companies’ Budget demand

New Delhi | Kolkata: Chief executives at large consumer-facing companies said easing constraints on disposable incomes with fiscal measures, job creation, lower taxes, fast-tracking production-linked incentive (PLI), ease of doing business and protecting MSMEs should be the focus of the government in the upcoming budget to spur demand in the pandemic-hit economy.

“The government will have to work on course correction, fiscal and relief measures to boost discretionary spending and put more money in the hands of consumers to stimulate subdued demand,” said Arvind Mediratta, managing director at retail chain Metro Cash & Carry. “There is also a need to reduce personal income tax rates across levels.”

Executives said revival across sectors will also hinge on efficient roll out of the vaccination, and providing more safety nets in terms of reforms to soften the economic blow due to the pandemic for stressed sectors.

India’s largest biscuits maker Parle Products executive director Arup Chauhan said schemes like MGNREGA need to be abolished as these are “spreading unwillingness to work”. The Mahatma Gandhi National Rural Employment Guarantee scheme is among the slew of sops provided by the government for financial security to stressed sectors. “Focus on secured jobs will lead to better disposable incomes and fuel demand across sectors including services and institutions. Tax cuts would help, but at a time when government expenditure and burden is high, deferments would help given that some businesses were shut for one-two quarters, Chauhan said.

While the fast-moving consumer goods sector has been growing in double digits in channels such as e-commerce and rural markets, demand in urban India, which has seen consumers downtrading, has remained subdued. Last month, market research firm Nielsen downgraded its forecast for the FMCG sector from near flat to minus 3% for the calendar year 2020, citing high inflation, lowered GDP and reduction in overall spending sentiment.

Food and grocery retailer Spencer’s Retail and Nature’s Basket managing director Devendra Chawla said increasing spending on infrastructure in the budget would create more jobs, boost connectivity and improve consumption. “At the same time, if interest rates are stable then it can increase discretionary money in hand of consumers, leading to upliftment of consumption of the discretionary categories,” Chawla said.

A report released by Boston Consulting Group (BCG) on Thursday said household consumption will be negatively impacted till year 2021, and forecasted that consumption will drop 10-12% this fiscal, reaching pre-Covid levels only by 2022. The report said overall consumption growth is also likely to get delayed by up to two years, with average annual household income expected to rise to around Rs 7.3 lakh by 2030, which is nearly 40% higher than now but 7-8% lower than pre-Covid estimates.

Anshu Budhraja, chief executive of direct selling company Amway, which sells Nutrilite protein supplements, said with self-care and wellness taking center stage this year, the government should rationalise GST on healthcare supplements from 18% to 5%. “Sustained efforts to boost micro-entrepreneurship and the growth of MSMEs, which remain the second largest employment generator and are the growth engine of the Indian economy, and reduction in income tax will provide relief to the middle class, which has been the worst hit by the pandemic,” Budhraja said.

Industry body Consumer Electronics and Appliances Manufacturers Association (CEAMA) said the budget is likely to focus on the self-reliant Atmanirbhar Bharat initiative through incentives and duty hikes. “But there should also be some stimuli to promote manufacturing in the country,” said Kamal Nandi, CEAMA president. The industry is also demanding incentives for consumers to buy energy-efficient products without which India may miss the targets of meeting climate change. “Indian consumers avoid buying high energy rated products due to higher price and hence some incentives are required,” he said.

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