Union Budget 2024: Impact of the budget on FMCG Companies

Finance Minister Nirmala Sitharaman allocated a significant amount of capital for MGNREGA, Agriculture, and allied sectors which could improve rural consumption.

The Finance Minister Nirmala Sitharaman announced several measures in the Union Budget 2024 that could boost rural demand, benefiting FMCG companies.

The government increased the funding for the MGNREGA scheme from Rs 60,000 crore in FY24 to Rs 86,000 crore in FY25.

The government allocated Rs 1.52 lakh crore for agriculture and allied sector, which is expected to give a boost to the sector.

Sitharaman also announced the release of 109 high-yielding and climate-resilient varieties of 32 crops for farmers in the upcoming financial year. The budget focuses on improving productivity and resilience in agriculture, with a review of research for climate-resilient seeds.

The increased funding for MGNREGA, agricultural support, and the focus on improving productivity in agriculture is expected to raise disposable incomes in rural areas, leading to higher rural consumption and benefiting FMCG companies.

FMCG sector in India:

The FMCG sector employs about 3 million people, making up roughly 5 per cent of all factory jobs in India. The total revenue of the FMCG market is expected to grow at a rate of 27.9 per cent annually from 2021 to 2027, reaching nearly USD 615.87 billion. 

In 2022, urban areas made up 65 per cent of the total FMCG sales, while rural India contributed more than 35 per cent. A good harvest and government initiatives are expected to help rural demand recover in FY25.

FMCG Stock Performance Today:

By the end of the trading session, Nifty FMCG reached 62,511.25 points. Among all the sectoral indices, FMCG was the top gainer with 2.68 per cent increase from the previous close. The increase was led by ITC, Godrej Consumers, Tata Consumer, Dabur and HUL.

Disclaimer: The article is for informational purposes only and not an investment advice.