Indian Economy News

Modi 3.0: FMCG companies can cheer the new coalition government

  • IBEF
  • June 11, 2024

In a gesture loaded with symbolism, Prime Minister Mr. Narendra Modi's first action after being sworn in as Prime Minister for the third consecutive time was to release the 17th instalment under the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme. Under PM-KISAN, farmers receive three equal instalments of US$ 23.95 (Rs. 2,000) directly into their bank accounts every four months. The release of nearly US$ 2.39 billion (Rs. 20,000 crore) for 9.3 crore farmers highlights the government's increased focus on the rural sector. Prime Minister Mr. Narendra Modi emphasized the government's commitment to "kisan kalyan," stating that the first file signed on taking charge pertained to farmer welfare and the continued support for the agriculture sector.

This shift should be favourable for fast-moving consumer goods (FMCG) companies, which have struggled with inflation, low rural demand, and rising competition from regional players. Anticipating a shift in government focus from PSUs and infrastructure to consumption, the Executive Director at Nuvama Institutional Equities, Mr. Abneesh Roy, noted that the new government will likely prioritize consumption over capex and infrastructure. Pricing growth for consumer companies, which was negative in FY24, is expected to rebound in FY25, aided by benign raw material prices.

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