Consumption growth to be lower at 10-11% in value terms this year: Nielsen

Consumption growth in the country this year will be slightly lower at 10-11 per cent in value terms, compared with 13.5 per cent in 2017, due to factors like implementation of GST, among others, according to market researcher Nielsen.

The growth in the June quarter is expected to be in 'high single digits', after a 11 per cent growth in the March quarter, owing to policy interventions and their impact on trade, it added.

Further, rural demand, which had a temporary impact in growth terms, owing to policy changes, saw an uptick in the March quarter.

"The consumption growth is projected in high single digits for the April-June quarter. For the year, it is expected to be 10-11 per cent, compared to 13.5 per cent in 2017, of several factors including GST roll up, and demonetisation in 2016 and 2017," Sameer Shukla, executive director, retail measurement services, South Asia, Nielsen (India), told reporters here.

He further indicated that the growth will be supported by a good monsoon for the third consecutive year.

GDP is also projected slightly higher at 7.4 per cent for FY19, compared with 6.6 per cent in FY18, the agency said, adding inflation is also projected higher, in the 4-6 per cent range, in the coming quarters.

The faster pace of rural growth, if it continues, will bear good news for the FMCG sector, Shukla pointed out.

Rural consumption had slowed down in 2017 due to sub-optimal monsoons in 2014 and 2015, and disruptions of demonetisation in November 2016 and implementation of the goods and services tax (GST) from July 1 last year, he said.

The rural/urban value growth ratio is up to 1.4x, in the March quarter, up from 1.1x in 2017, according to the agency.

Speaking about the trade, it noted that that modern trade has grown at 1.5x of the traditional trade in the March quarter, from the year-ago period.

Further, big manufacturers, with a sales over Rs 10 billion, got an edge over smaller ones during demonetisation and GST roll up, due to their direct reach network.

"Smaller ones, however, have bounced back and outpaced the growth of their larger counterparts in the last two quarters, owing to supply chain efficiencies," the agency said.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel