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One thing is certain that the budget presented by the Finance Minister is forward-looking. With some focus on short-term initiatives, the tabled budget is expected to provide an impetus for growth with a vision to steer the economy for the next 25 years. The announcements made are in line with ‘Amrit Kaal', i.e., focus of India@100, which is primarily around making long-term investments in the economy that will benefit the youth, women and farmers. Furthermore, the new generation is likely to be the base that will drive the Prime Minister's vision of a $5 trillion economy and the government is strengthening this base to drive the agenda.
Here are five announcements that will fuel the consumer sector.
Support via Gati Shakti
The Prime Minister's Gati Shakti vision of transforming the logistics space will be quite beneficial for the consumer, retail and the e-commerce sector. The sector always faced a challenge due to high logistics cost and inefficient supply chains, which resulted in higher operating cost for the sector. As compared to a global average of 8%, India's logistics cost is at 14% of GDP. The budget paves the way for expansion of highway network, initiation of Unified Logistics Interface programme, multimodal logistics park as well as usage of railways system. Its efficient utilisation will definitely help in bringing more competitiveness and cost efficiency in the consumer sector. As per Grant Thornton Bharat's survey, 32% respondents wanted the government to enhance logistics and supply-chain efficiency.
Direct payment of MSP to farmers
The announcement of direct payment of Minimum Support Prices (MSP) into the farmers' accounts will improve their effective earnings and add more muscle to the rural consumption. This will also lead to an increase in disposable income at the hands of the farmers, which will be beneficial since rural markets account for 40% of the total fast-moving consumer goods (FMCG) market in India.
Comprehensive Scheme for oilseeds
India is one of the largest importers of vegetable oil and the import cost is creating a pressure on the all the food and beverage (F&B) companies in India. The Finance Minister's move to launch a comprehensive scheme for increasing the domestic production of oilseeds is a welcome move and will result in reduced dependence on imports, thus, making the F&B sector more resilient.
Extension of ECLGS scheme
India's MSME sector contributes to 29% of the India's GDP. The pandemic created a lot of stress on the overall functioning of the sector. Extension of Emergency Credit Line Guarantee Scheme (ECLGS) will further strengthen the ecosystem for them. The ₹ 50,000 crore extension given to MSME's functioning in the hospitality and related services will help the sector to tide over the effects of the pandemic. Initiatives, such as National Skill Qualification Framework and Digital Ecosystem for skilling and livelihood, will help in making MSME's more competitive. This is also in line with Grant Thornton Bharat's survey wherein 54% respondents wanted more support on the skilling front.
Extension of Bharatnet Programme
The government announcement on extension of Bharatnet Programme under public-private partnership (PPP) model in rural areas will ensure higher internet connectivity further providing villages and rural areas with better access to digital initiatives. With the right infrastructure and an increasing volume of smart phone shipments in India (11% YoY increase in 2021) will definitely help the e-commerce sector to sustain growth momentum.
From all the initiatives announced, the government is definitely continuing with its agenda of ‘minimum government and maximum governance'. Reduction in compliance (25,000 provisions) and repealment of redundant laws (1,486 union laws scrapped) go a long way in establishing intent of ease of doing business. On an overall basis, the implementation of these initiatives will help the consumer and retail sector in achieving its growth initiatives.
This article was originally published on NDTV.