Consumption push: Shop till you drop?

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Subscribe to enjoy similar stories. There is a spring in the step of Indian consumer-related companies after the budget 2025’s proposal to make income up to ₹12 lakh tax-free under the new tax regime. With more disposable income in the hands of millions of taxpayers, the expectation is that consumers would be encouraged to spend more on items like staples, electronics, clothes, footwear, restaurants and travel.

In the process, the government forgoes revenue of around ₹1 trillion in direct taxes. Sure, the move is a game-changer and is expected to offer the much-needed stimulus to demand, helping consumer companies that are finding it tough to boost sales amid moderating urban demand and a slow rural recovery. But a rising tide may not lift all boats.

According to ICICI Securities Ltd’s analysts, discretionary companies will benefit more than staples. “Within discretionary, we reckon restaurants and consumer durables will likely gain. Within staples, companies with higher urban exposure and higher premium salience stand to benefit," said the analysts in a report on 1 February.

Further, products targeted at mass consumption are unlikely to gain significantly on volumes. Consumers are likely to order more on food delivery apps, which means investors see Zomato Ltd and Swiggy Ltd benefitting, evident from the 4-7% gain in their share prices on Saturday. Read more: Budget aims to deepen electronic goods value chain; capex target disappoints industry Trent Ltd’s shares were the biggest gainers in the Nifty 50 index on Saturday, rising 7%.

InterGlobe Aviation Ltd and The Indian Hotels Co. Ltd gained 4-5%. The Nifty FMCG index and the Nifty Consumer Durables index gained about 3% each on a day when the broader Nifty 50 index