What budget 2021 means for FMCG sector

ET INTELLIGENCE GROUP: For an economy waiting for a consumption-driven boost, the Budget 2020 proved to be disappointing. Though the Budget had provisions to improve the conditions of living through provision of water and investment in health and well-being, there was no major immediate measure to boost disposable incomes.

Incidentally, the word consumption did not at all occur in the Budget speech – reflective of the government’s low priority on spurring consumption. The S&P BSE FMCG Index rose 1.85 per cent at the end of the Budget - pulled up by stocks such as ITC, Dabur and Tata Consumer. With no change in the duty structure on cigarettes and tobacco, the ITC stock had a relief rally - soaring nearly 6 per cent.

In a bid to improve agricultural infrastructure and enhance farmers' remuneration, the Agriculture Infrastructure and Development Cess (AIDC) has been proposed on a small number of items such as petrol & diesel and liquor. Cess on fuel prices is certainly a negative for consumers - reducing their share of wallet on items of discretionary items of consumption. It is negative for market leader HUL.