Budget 2023 Expectations: Rural Demand Needs A Boost, Says Marico's Harsh Mariwala
Recovery in rural demand was not as discernible as retail inflation stayed at elevated levels.
Higher fund allocation for rural spending is expected in the Union Budget 2023, as inflation-induced weak consumption is holding back recovery for the fast-moving consumer goods industry, according to Marico Ltd. Chairperson Harsh Mariwala.
"Rural demand needs to be increased. So, the government should do whatever it takes to increase demand," Mariwala told BQ Prime, on the sidelines of an event in New Delhi.
Feeble rural demand continues to hurt the makers of soaps-to-staples, denting sales growth even in the December quarter of the fiscal 2023.
Marico, the maker of Parachute hair oil, estimated its consolidated revenue grew in the lower single digits in the third quarter. It expects modest growth in operating profit due to low revenue growth.
"Recovery in rural demand was not as discernible, as retail inflation stayed at elevated levels," according to Marico's filing with the exchanges.
Mariwala also expects the government to simplify direct taxes. "That could go a long way in ease of doing business."
Saugata Gupta, the company's managing director and chief executive officer, also said he expects the budget—which would be presented on Feb. 1—to focus on boosting disposable income of burgeoning middle-class through favourable fiscal policies and beneficial tax regimes.
According to Gupta, these measures should eventually lead to demand generation and accelerate consumption at the middle and bottom of the pyramid.
"While significant efforts are being made by the central bank to rein-in inflation, there should be continued thrust on building rural infrastructure that would re-energise the rural economy through long-term job creation," he said.
Amnish Aggarwal, head of research at financial services firm Prabhudas Lilladher, expects higher allocation towards schemes like MGNREGA, PM Awas Yojana and food security, besides rural development and credit availability.
It will improve employment, rural incomes and demand, he said.
The Plastics Menace
Mumbai-based Mariwala was in Delhi to unveil the first-of-its-kind innovation playbook from the not-for-profit Marico Innovation Foundation to tackle the conundrum of plastic waste.
The report highlighted that the problem grew at a significant pace over the past five years and so has its waste output.
In 2016-17, the country consumed 14 million tonnes of plastic, and it rose to 20 MT in 2019-20, growing at a compounded annual growth rate of 10%.
Even as everyone talks about sustainability and recycling of plastics, little has moved on the ground, Mariwala said. Most of the plastic waste generated in India were sent to landfills or aquatic dumps, he said.
"Currently, just 10% of the plastic that gets generated is recycled," he said.
Mariwala said that it was partly due to plastic not being collected in the right way, as most of it is done manually.
Plastic is predominantly used in flexible packaging such as food packets, cosmetics and delivery boxes. Most food companies, such as Marico, Hindustan Unilever Ltd., Nestle India Ltd., Future Consumer Ltd., Coca-Cola Co., PepsiCo Inc. and Parle Agro Pvt., aim to move to 100% recyclable packaging by 2025.
All stakeholders should invest in machinery and technology to bring a change, he said.
"It should begin with the supply of good, recycled plastics and, once it happens, even the costs will come down."