'Green shoots' in FMCG: RBI says rural economy responsible for sector's revival
rural economy is emerging as a key driver of the Fast-Moving Consumer Goods (FMCG) sector's revival, hinting at a robust turnaround in aggregate demand after a sluggish start to the 2024-25 financial year.
The Reserve Bank of India (RBI) in its monthly bulletin noted that with rising incomes and improving infrastructure, rural consumption is increasingly fuelling volume growth in FMCG products, underscoring the sector's strengthening fundamentals.
The sector registered an approximate 6.6 per cent volume growth in the first quarter of FY25.
FMCG companies are beginning to see the early signs of recovery, or «green shoots,» in their markets.
As per the apex bank, key indicators of this resurgence include increased utility penetration—such as LPG, electricity, and two-wheelers—across rural areas.
Alongside this, rural savings are on the rise, as evidenced by the growing number of savings bank accounts and their outstanding balances, the RBI noted.
One of the most significant factors behind this rural spending boost is the receding inflationary pressures, which have led to a catch-up in consumption volumes with urban areas. «The average rural consumer is getting increasingly price conscious,» the RBI said.
Moreover, as per a report by Anand Rathi, a financial service company, the rural economy of India has emerged as a significant driver of economic growth, outpacing urban areas largely due to increased government spending in the recent quarters.
For the coming months, the report stated that the growth trend in
