GCPL CEO Sudhir Sitapati predicts rural market recovery by Diwali

Says consumption and GDP have to be in tandem.

Sudhir Sitapati, MD and CEO of Godrej Consumer Products Ltd (GCPL) expects recovery in rural markets in the second half of the year on the back of good monsoon and government measures.

“A lot of people are saying it and I'm also seeing a little bit of green shoots. Also the government is quite cognizant of reviving consumption in rural areas. I'm actually quite optimistic, the monsoon also seems quite good. So I'm quite optimistic of rural revival. For the last two-to-three years I have not been sure, but I think by Diwali we will see some good rural recovery.”

As per Sitapati rural consumption has to grow one-and-a-half times as much as urban consumption for the fast moving consumer goods (FMCG) goods.  “That is what has been the case for the last 20 to 25 years. It's not like rural is actually under-growing urban, it's just not growing faster than urban like it was,” he said.

Sitapati also said domestic consumption needs to be spurred.

“GDP growth rate was 8% last year but domestic consumption was only 4%. Domestic consumption is often a measure of the income growth at the bottom of the pyramid. So 4% domestic growth has to go up. Consumption growth and GDP growth have to be in tandem. I'm sure that the government will take measures to spur domestic consumption,” he said.

Sitapati was speaking on the sidelines of the launch of a new Renofluthrin formulation in its new GoodKnight Flash liquid vaporizer that is set to change the local household insecticide market. 

He further spoke about the growing economic divide and spoke about the diverse spending patterns in the country.

 “At the top of the pyramid, the top 20% of India, who hold 50% of the GDP, are experiencing a boom in discretionary spending. The next 80% are under stress, which even government data suggests. Consumption growth is 4% while GDP growth is 8%, indicating this disparity.”

Sitapati further mentioned that at GCPL they are constantly trying to innovate in line with the K-shaped economy. They are  focusing on the top of the pyramid for e-commerce and modern trade and are also making products more accessible to the bottom of the funnel.