Consumption Slowdown Just A Phase, Kirana Stores Hit Hard: Marico’s Harsh Mariwala
There is a need for the government to unleash short-term and long-term reforms to reverse the slowdown, the Marico chairman says.
The neighbourhood shopkeeper has been hurt more than modern retail chains due to the consumption slowdown in India, and the industry will have to evolve innovative solutions to come out of it.
That’s according to Harsh Mariwala, chairman of Marico Ltd., who believes the slump in consumption is just a “phase”. The GDP growth slowdown is a "reality" but all should keep a forward-looking approach to come out of it, he told Press Trust of India.
"While modern retail is showing better numbers, it is at the cost of general trade. It is just that one channel is compensating for the other channel. However, an overall low pick-up is a reality which is what FMCG (fast-moving consumer goods) companies have been progressively experiencing," Mariwala said.
There is a need for the government to unleash both short-term and long-term reforms to reverse the slowdown, he said, adding that there is no quick fix or set formula to fight the same.
Listing out potential measures that can be taken, Mariwala pitched for quarterly GST filing for companies that make less than Rs 1 crore in revenue per year. A reduction in GST rates, adoption of direct tax code, and lowering land costs and real interest rates are the other steps that can be taken.
To push up consumption demand, Mariwala said the government needs to take steps to increase liquidity in the market and boost sentiments. He said businesses need to be innovative and take an opportunistic view of things by making fundamental improvements in their models.
Companies need to look internally to counter cyclical "problems", he said, adding that some companies have thrived in the worst-performing sectors by doing something impactful for the customers. "Businesses shouldn't get swayed by the Indian economy not growing at higher growth rates. They should do something so that they stand out, and they are certain to reap the rewards that come with making that effort," he said.
Mariwala said inclusion of research and development spends, as part of the corporate social responsibility mandate, will act as a nudge to companies to look at innovation, and also give rise to public-private partnerships. He also said there is a need for changes in the education system, which depends excessively on rote.
"With too much emphasis on standardised test results and benchmarking, the education system can stifle children's natural creative ability making it difficult for them to be innovators later in life," Mariwala said. Offbeat approach and methodology that stir curiosity and instil fearlessness among children is also needed, he added.