New Delhi: Finance Minister Nirmala Sitharaman has reduced income tax and increased the standard deduction rebate in the Union Budget 2024-25. This move by the government is expected to boost growth in the FMCG sector. According to marketing research firm Kantar Worldpanel, “The FMCG sector is expected to register a 6.1 per cent yearly growth in FY 2024-25 in the rural market, compared to 4.4 per cent last year. However, growth in the urban market remained flat at 4.2 per cent in this fiscal year.”
The report by Kantar Worldpanel indicates that volumes in the rural market could soon equal those in the urban market, which is currently higher. The rural FMCG market has become more valuable to the industry, generating almost half the volume and value for the sector. Kantar Worldpanel also noted that the growth in the rural FMCG market in India is driven more by population than by consumption. The firm added, “People are turning to premium products, including items like food spreads and dressings, face scrubs/peels/masks, body washes, hair conditioning serums, muesli, and Korean noodles.” The report also highlighted the rapid adoption of e-commerce and quick commerce in the market.
In the Budget presented on Tuesday, FM Sitharaman reduced personal income tax to 10 per cent on income of up to Rs 10 lakh per year under the new tax regime, while the standard deduction has been increased from Rs 50,000 per year to Rs 75,000 per year.
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