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Budget 2014 may revive the Indian consumption story

Ajita Shashidhar     July 10, 2014

Packaged food, branded apparels, stone-studded jewellery, footwear below the Rs 1,000 price points, LED and LCD television sets (upto 19 inches), soaps and oils are going to be cheaper after the Budget.

Does that mean that we are going to see more shoppers flocking to retail stores? Will the upcoming festival season be a super bonanza for brands and retailers this year?

Marketers feel that the Indian consumption story is surely in for a huge fillip this year. "These announcements are a great effort to spiral consumption," says brand specialist Harish Bijoor.


With incentives such as tax exemption limits being raised, the disposable income of Indians is going to increase, and that will definitely have a positive impact on spends. The reduction of customs duties on products such as LED and LCD television sets, for instance, could encourage people to upgrade.

"The same consumer who has been postponing the replacement of his TV which he had bought five years ago may not hesitate to upgrade now," says Bijoor.

"From a lifestyle consumption perspective, the budget definitely augurs well for consumers. It will certainly make salaried urban consumers feel better," agrees Bijou Kurien, former chief executive at Reliance Lifestyle.

Raghu Vishwanth, MD of brand valuation and consulting company Vertebrand, views these announcements as a move to spur volume consumption across income groups. "Buying branded garments or shoes have become a regular necessity for Indian consumers even in smaller markets. Moves such as these will ensure that far greater volumes are consumed."


Will a boost to the consumption story mean the entry of more foreign brands into India?

Experts feel that may not happen for a while. "International brands will wait and watch and see to what extent the retail growth is happening before they make the plunge," says Vishwanath.

In fact, S. Raghunandan, CEO, Jyothy Laboratories, only expects a marginal fillip to consumer spends. "These moves may help increase consumption in the short run, but I don't see any drastic impact until the rate of inflation comes down."


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