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“A better-than-normal monsoon, improving agricultural sector and slashed interest rates will certainly aid consumption,” said Puri, speaking to CNBC-TV18 along the sidelines of the Invest Kerala Global Summit. The ITC chairman and managing director, who also serves as president of the Confederation of Indian Industries (CII), was responding to a question on consumption recovery.
“Economic development is a journey,” he added, “The recovery in consumption will happen in steps, it isn’t an on-off switch — while rural consumption has done well, we must keep an eye out on urban consumption and recovery; urban consumption will recover over a period of time.”
While rural markets have witnessed a comeback of sorts in the last few quarters, consumption in urban markets, especially in the FMCG sector, has been in the doldrums. Earlier this week, Hindustan Unilever Ltd’s managing director and CEO told CNBC-TV18 that urban consumption could take a few months to get back on track.
“[Consumption] has been soft owing to transient factors, climate-change-related factors and the external sector,” said Puri, who added that the “significant” relief by way of Income Tax rebates in the recent union budget would augur well for consumption.
Income tax relief notwithstanding, India’s growth trajectory continues to hold some reason to cheer for Puri. “We continue to remain the world’s fastest-growing economy despite some below-par estimates, which came about owing to transient factors,” he said, “Our growth rate of 6.5% in the context of global stress and excess capacities is a very good achievement.”
Some experts feel that one of the factors that may affect consumption is the Quick Commerce boom. However, the ITC boss said he believed Kirana stores would continue to hold their own as a “dominant” channel. “Quick Commerce and E-Commerce are channels that can aid consumption growth, he said, “Despite their growth, the Kirana channel will remain the dominant channel.”
The ITC chief reasoned that Kirana stores are well poised to hold their own owing to their ability to deal with “wider assortments” as they service India’s consumption aspirations. “I’m hoping and quite sure that Kirana and e-commerce channels co-exist despite some significant overlaps.”
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