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New Delhi, Feb 4 (IANS) Focus on the rural economy in the budget has been waning over the years and in such a scenario a revival of the rural economy would take time, <keyword id="45949" type="General" weightage="100" keywordseo="jm-financial" source="Orion">JM Financial</keyword> said in a report. In the absence of a specific focus on the rural economy in the <keyword id="6360189" type="General" weightage="50" keywordseo="union-budget" source="Orion">Union Budget</keyword> for 2023-24, analysts don't see immediate triggers for revival in the rural economy. Moreover in the absence of specific or enhancement of allocation towards the rural economy, we believe that the rural environment would have to revive on its own. Hence we would view businesses dealing with price sensitive low ticket items as less likely to benefit, JM Financial said. An attempt is made to make the new tax regime more attractive after getting a low response in FY23, however we believe the benefits in the form of tax saving on enhanced no-tax limit (INR 0.2mn) is unlikely to spur demand in a meaningful manner, JM Financial said in a report. Unlike the anticipation by a section of the market, rural focus was missing in the budget announcements. The expectations of a populist budget was linked to 9 state elections in 2023, moreover with FY24 being the last full year budget before the general elections in CY24. However, we believe that the schemes relating to empowerment of women <keyword id="75772" type="General" weightage="50" keywordseo="self-help-groups" source="Orion">Self Help Groups</keyword>, artisans and setting up of digital infra for agriculture and farmer centric solutions would provide opportunities in the rural economy to improve their livelihood, JM Financial said. Moreover, the budgetary allocation towards rural centric schemes like <keyword id="6361863" type="General" weightage="50" keywordseo="mgnrega" source="Orion">MGNREGA</keyword> and PM <keyword id="865803" type="General" weightage="50" keywordseo="gram-sadak-yojana" source="Orion">Gram Sadak Yojana</keyword> has been declining ever since FY22. Even the sentiments as collated by CMIE show a declining trend in the rural economy ever since June '22 whereas the sentiments in the urban economy seem to be holding up well, JM Financial said. In the absence of a specific focus on the rural economy, we don't see immediate triggers for revival in the rural economy, the report said. The latest rabi sowing has been progressing well even on a higher base of last year, except in the case of wheat. Subsidy burden has been the major pain point in India's fiscal, led by rising fertilizer and food prices. Fertilizer subsidy was increased by INR 1.1tn in FY23 over and above the budgeted figures of INR 1.05tn. Allocation towards fertilizer subsidy has been made to the extent of INR 1.75tn in FY24. We believe with easing inflationary pressures, the government could have limited the allocation to INR 1.4tn, as fertilizer prices have moderated by 40% from its peak. However, the geo-political situation is still in a flux and the government's higher allocation seems prudent at this juncture. Food subsidy has been pegged at INR 1.97tn (vs INR 2.9tn FY23RE), as the outlay would be reduced with the discontinuance of the PM Garib Kalyan Yojana. On an overall level, subsidies form 1.2% of GDP vs 1.9% in FY23RE. Past data indicates that the exuberance or otherwise relating to the budget day normalizes within a month in the equity markets. Moreover, a substantial positive performance in Nifty was witnessed in the week following the budget day only during FY16, FY20 and FY21. The personal income tax changes in the Union Budget affect many but the impact is low, Credit Suisse said in a report. The split of salary income by income groups shows that while the number of filings is mostly by low-income groups, the bulk of the taxes come from high income. 56% of the filers belong to the low-income group but they add to just 2% of the tax collected. People earning more than Rs 10mn are less than 1%, but they add to 10% of the tax collected, the report said. Inflows from small savings deposits have shrunk considerably. Small saving deposits for government have been declining, and at the current pace, can be 20% YoY lower for FY23. This may still be marginally better than budgeted, though these flows are generally larger nearer to the year-end. While bank deposit rates have risen considerably, NSSF rates remained low for most of FY23, were raised in Jan-2023. The Centre continues to remain dependent on small savings flows to fund the deficit, Credit Suisse said.

Revival of rural economy to take time in the absence of triggers: JM Financial

"FM Sitharaman should try a MGNREGA-like plan for urban unemployed."

Prime Minister <keyword id="6354477" type="PERSON" weightage="100" keywordseo="Narendra-Modi">Narendra Modi</keyword> has suggested 24 steps for an action plan to renovate the railways. 
 
The measures include asking the ministries of food and railways to chalk out the total nine-month food requirement of the Northeast states and formulate a way to transport the whole stock in one go. The other steps are Wi-Fi connectivity on all passenger trains in three months and ‘scrap-free railways’ by June 30 next year. 
 
The railways have been asked to find out an area where world-class technology can be deployed. 
 The action points are a mix of macro- and micro-level objectives. What is evident in all action points is Modi’s concept of getting departments and ministries to work in tandem with common objectives. The <keyword id="6696781" type="ORGANIZATION" weightage="100" keywordseo="Urban-development-ministry">Urban Development Ministry</keyword> and the railways have been asked to connect all major airports with the metro rail. 
 
One of the action points is to connect all the underdeveloped areas with the developed areas. Leveraging the UPA’s flagship MGNREGA, the Prime Minister’s Office wants the project to be linked with the laying of tracks and other works in the railways.

PMO Suggests 24 Steps To Transform Railways

<ul><li>Salaried jobs, which are amongst the more well-paying jobs, are the silver lining in an otherwise deteriorating employment market, <keyword id="6493461" type="General" weightage="80" keywordseo="cmie" source="Orion">CMIE</keyword> data shows. </li><li>Even amongst salaried jobs – those created by listed companies came in at 0.7 million in 2021-22, offering up to three-times higher salaries than other salaried jobs. </li><li>A rise in industrial jobs, and a decline in agricultural and personal service jobs is another good indicator, say analysts. </li></ul>The Indian workforce is smaller than pre-pandemic days, but the quality of jobs has gotten better, according to a new survey by the Centre for Monitoring Indian Economy (CMIE). According to the latest CMIE report, salaried jobs, which are amongst the more well-paying jobs, are the silver lining in an otherwise deteriorating employment market. The report states that 8.5 million salaried jobs were added in September-October 2022. Overall, salaried jobs stood at 86 million in September, and 84.7 million in October – the highest in any month since the beginning of the Covid-19 pandemic. <cmsannotation type="cmsannotation" annotationid="Smaller, but better paid workforce" comment="subhead" text="Smaller, but better paid workforce">Smaller, but better paid workforce</cmsannotation> More interestingly, it’s the jobs created by listed companies that offer the most comfort, according to Mahesh Vyas, managing director and CEO of CMIE. According to Vyas, salaries in listed companies are nearly three-fold higher than other salaried jobs – the average salaries in listed companies in 2021-22 stood at ₹7.14 lakh per annum, when<a href="https://www.cmie.com/kommon/bin/sr.php?kall=warticle&amp;dt=20221107154522&amp;msec=023"> compared</a> to ₹2.63 lakh per annum across all salaried jobs. “This is way ahead of wages in other forms of employment. For example, a business person made ₹1,34,323 per annum and small traders and daily wage labourers made about ₹1,17,053 per annum. Farmers made even less,” Vyas said. <cmsannotation type="cmsannotation" annotationid="Agriculture, personal service jobs decline – but that’s a good thing, says Credit Suisse" comment="subhead" text="Agriculture, personal service jobs decline – but that’s a good thing, says Credit Suisse">Agriculture, personal service jobs decline – but that’s a good thing, says Credit Suisse</cmsannotation> Employment metrics appear to have deteriorated when the overall numbers are taken into account, with the labour participation rate falling from 39.3% in September to 39% in October. The rate of unemployment also rose from 6.4% to 7.8%. However, CMIE notes that it has seen a rise in industrial jobs when compared to the pre-Covid levels seen in October 2019. “The drop in agricultural employment should be seen positively, given that it usually means hidden unemployment. Further, the decline in service jobs is mostly in personal services, which are also generally low in value-addition,” said a report by Credit Suisse. <cmsannotation type="cmsannotation" annotationid="Rural recovery underway, says Morgan Stanley, but caution needed" comment="subhead" text="Rural recovery underway, says Morgan Stanley, but caution needed">Rural recovery underway, says Morgan Stanley, but caution needed</cmsannotation> While a bulk of the salaried jobs – 63% of them – came from the urban markets in 2021-22, analysts at Morgan Stanley say that a<a href="https://www.businessinsider.in/finance/news/rural-recovery-underway-says-morgan-stanley/articleshow/94935646.cms"> rural recovery</a> is underway, too. Four key indicators – employment, credit offtake, auto sales and trade, are all set for a rebound, the research firm noted. “We believe rural demand is set to rebound, helped by wider reopening, improving labour market conditions, and improving terms of trade for the rural sector,” the report said. Credit Suisse adds that the demand for jobs under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is also the lowest since the beginning of Covid-19. However, on a cautionary note, CMIE says that daily wage labourers and small traders lost 11.8 million jobs in September-October 2022 – most of these jobs are in rural India. SEE ALSO: <a href="https://www.businessinsider.in/finance/banks/article/its-not-just-mercedes-even-bank-deposits-are-competing-with-equities/articleshow/95879457.cms">It’s not just Mercedes, even bank deposits are competing with equities</a> <a href="https://www.businessinsider.in/finance/news/indias-gdp-growth-comes-in-at-6-3-in-q2-manufacturing-mining-witness-negative-growth/articleshow/95888683.cms">India's GDP growth comes in at 6.3% in Q2: manufacturing, mining witness negative growth</a> <a href="https://www.businessinsider.in/finance/news/slower-rate-hikes-on-the-cards-say-analysts-ahead-of-rbis-december-monetary-policy-meet/articleshow/95881537.cms">Slower rate hikes on the cards, say analysts ahead of RBI’s December monetary policy meet</a>

Indian workforce smaller than pre-pandemic days, but quality of jobs better

<ul><li>HUL Chairman and Managing Director, <keyword id="169120" type="PERSON" weightage="20" keywordseo="Sanjiv-Mehta">Sanjiv Mehta</keyword> made a clarion call for more government support to boost consumption in the cities. </li><li>Nearly 60% of the total sales for HUL comes from urban cities, which fetches a large portion of the premium for FMCG companies. </li><li>Between falling earnings, job losses, poor business, and widespread risk aversion, many retail stores have closed down, and HUL’s distributors are not able to recover their dues. </li></ul>Sanjiv Mehta, the Chairman and Managing Director (CMD) of Hindustan Unilever (HUL), said that India would have to be “aggressive” with spending to boost consumption in the cities before it’s too late. For some of the distributors of India’s largest consumer staples company, the damage has already been done. Speaking at a virtual event organized by the All India Management Association (AIMA), Mehta raised the need for a cut in interest rates, given the signs of urban distress that have emerged due to the COVID-19 pandemic. “There is a risk of inflation, but the bigger risk is the economy going into a tailspin. So there should be an aggressiveness with which we reduce the interest rates, clearly with the risk that there could be more inflation coming,” <a href="https://economictimes.indiatimes.com/news/economy/finance/government-has-to-step-up-spending-before-its-too-late-says-hul-chairman-sanjiv-mehta/articleshow/78246163.cms?utm_source=contentofinterest&amp;utm_medium=text&amp;utm_campaign=cppst.">he said</a>. While the resilience of the rural economy has been a calming factor during the lockdown, it is not enough for the fast-moving consumer goods (FMCG) companies like HUL, ITC, or Marico to make money as urban areas account for the majority of sales in India. A big part of rural India still buys unbranded products, while the margin for FMCG companies comes from premium products, which are sold in the big cities. “The rural per capita consumption of FMCG is less than half of the national average. It is very visible now that the rural growth rates are higher. The issue for us is the urban growth rate,” said Mehta. And, on that count, HUL and Britannia are the most vulnerable because the two companies make 60% of their revenue from the cities. <table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Company </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Rural sales </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Urban sales </td></tr><tr><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Britannia </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">40% </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">60% </td></tr><tr><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Emami </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">50% </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">50% </td></tr><tr><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Dabur </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">45% </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">55% </td></tr><tr><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Hindustan Unilever </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">40% </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">60% </td></tr><tr><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Nestle </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">25% </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">75% </td></tr></tbody></table> Source: Edelweiss report dated September 16 Urban poor under distress The lockdown has taken a toll on the income across regions and classes, socio-economic categories. The government has introduced various relief measures for the rural economy during the pandemic, such as the government economic stimulus increased allocation under the MGNREGA scheme to enhance job opportunities in rural areas. These relief measures are largely focussed on rural areas. On the other hand, Mehta believes that the government should look at how the urban buying sentiment can be revived. “There is very clear anecdotal evidence of growth rates in the staples in urban India slowing down, which could be a very clear pointer that the urban poor are feeling the stress,” he said. <div type="image" title="HUL portfolio" msid="78267486" hostid="153"></div> The on-ground reality for HUL distributors According to the ICICI Securities report, the increase in the distributor’s bad debts due to the lockdown has led to the permanent closure of a few retail stores. The distributors are finding it difficult to absorb this loss with margins of 4%, the report said. The company has also not offered a grace period to the credit days, which continue to hang like a sword on distributors’ necks. With a downtrend in its revenue, HUL has reduced the number of trade schemes and discounts. The company has also taken a price hike of 8% in Red Label Dust tea. HUL’s revenues declined 7% in the first quarter if the revenue from its GSK Consumer integration⁠— of which the food powder Horlicks was the biggest contributor⁠—is excluded. HUL’s share price reflects investors’ pessimism The share price of HUL hit a nearly three-month low of ₹2,011.70 on September 20. While it recouped the losses by the end of trade, during the day - it was trading 2% lower today when the overall market was down 0.32%. <div type="image" title="HUL (1)" msid="78267507" hostid="153"></div> Edelweiss Securities report highlighted various factors that have led to underperformance of the HUL’s stock. One of the key reasons was that out-of-home products like Kwality Walls ice-cream and Kissan Jam constituted approximately 5% of HUL’s portfolio, and it declined 69% in the first quarter. Edelweiss also expects margins to remain under pressure, with the declining economy. “Skincare, which is a high margin business, is doing well but still not back to pre-COVID levels. This along with tea prices being up 60% YoY and palm oil prices staying elevated, gross margin will be under pressure YoY” And lifestyle products sell more in urban India than in the smaller towns and villages. SEE ALSO: <a href="https://www.businessinsider.in/business/news/mukesh-ambani-reliance-retail-gets-its-second-investment-in-two-weeks-kkr-invests-5550-crore/articleshow/78267281.cms" data-type="tilCustomLink">Mukesh Ambani's Reliance Retail gets its second investment in two weeks – KKR invests ₹5,550 crore</a> <a href="https://www.businessinsider.in/stock-market/news/top-stocks-to-watch-tata-group-future-enterprises-ril-central-bank-of-india-dhfl-care-ratings-and-others/articleshow/78267049.cms" data-type="tilCustomLink">Top stocks to watch— Tata Group, Future Enterprises, RIL, Central Bank of India, DHFL, CARE Ratings and others</a>

Data shows why HUL Chairman is urging the government to spend more to boost consumption

New Delhi, Jun 11 () Job loss is the most severe immediate impact of COVID-19 crisis while lower economic growth and rise in inequality would be the long-term effects, according to a survey by the Indian Society of Labour Economics (ISLE). The online survey was conducted on 520 ISLE members in the last week of May. The preliminary results showed that loss of employment was considered as the most severe immediate impact of the crisis while lower economic growth and rise in inequality were probable long-term impact. As per the survey, the immediate policy priorities suggested were protection of workers and families, short-term employment creation and income transfers to affected workers. Short-term policy requirements were support to MSMEs, expansion of MGNREGA, job creation, cash transfers and social security while the long-term measures included need for building a stronger public health system, universalisation of social security and policies for welfare and rights of migrants. The survey was discussed at a two-day virtual international conference on "Implications of the COVID-19 Crisis for Labour and Employment in India: Impact, Strategies, and Perspectives" on June 8-9. The conference was organised by the Institute for Human Development (IHD), International Labour Organization (ILO) and ISLE. "The lessons from other countries suggest that active labour market policies including cash transfers and wage subsidy to small enterprises can be effective in mitigating the adverse impact of COVID 19 on livelihoods and employment of those worse affected in India," Alakh N Sharma, Director, IHD said during the conference. Dagmar Walter, Director, ILO Decent Work Team for South Asia and India, said there is a need to prioritise work for all and fault-lines need to be addressed for better outcomes. The takeaway from the conference was that overall, there has been about 25 per cent decline in total GDP with the industrial sector (especially MSMEs) highly disrupted and down by 54 per cent. Without any stimulus the economy might have declined by 12.4 per cent, the participants noted. Estimates of job loss showed that 80 per cent jobs were affected in urban economy, most of which were self-employed, 54 per cent jobs were affected in rural economy, most of which were casual employment, they said. The government had imposed lockdown on March 25, 2020 to fight COVID-19. KKS ANU ANU

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Revival of rural economy to take time in the absence of triggers: JM Financial

IANS

"FM Sitharaman should try a MGNREGA-like plan for urban unemployed."

Business Insider India

PMO Suggests 24 Steps To Transform Railways

BI India Bureau

Indian workforce smaller than pre-pandemic days, but quality of jobs better

Rounak Jain

Data shows why HUL Chairman is urging the government to spend more to boost consumption

Navdeep Yadav

Job loss most severe immediate impact of COVID-19 : Survey

PTI

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