India’s fourth largest and INR 3 trillion sector has been going through a major slowdown in the last few months. The value growth of India’s FMCG sector slowed for the fifth quarter, registering a growth of 6.6% against 15.7% in the last year and down to 7.3% in the last quarter.Budget 2020 has come at a time when the economy is experiencing a log jam due to both domestic and global factors. FMCG being one the largest sectors, there is a need for government to help increase consumer demand and control inflation to stabilize market conditions and boost economic growth.
Lower consumption in rural markets is one of the major reasons for retail off-take in the last one year. Growth of FMCG in rural sector, which includes three-fourths of the country’s population dampened due to very slow consumer demand and liquidity crunch. Rural consumption, which accounts for 36% of overall FMCG sales in India, is at its lowest in seven years. As per reports, 45% of the slowdown is led by small players driven by fewer new manufacturers entering the FMCG space, the existing decline in distribution added with slowdown in innovation.