Boosting India's rural economy: Sudhir Sitapati's vision for Budget 2024

Sudhir Sitapati, Managing Director and CEO of Godrej Consumer Products in an exclusive conversation with Republic Business “Nation Wants to Grow” highlighted the need for Budget 2024 to focus on enhancing domestic consumption, particularly within India's rural economy. Sitapati highlighted that while India's GDP grew by about 8 per cent last year, domestic consumption lagged at only 4 per cent. This disparity, he suggests, is indicative of slower growth at the bottom of the economic pyramid, which poses challenges for the overall economic health of the country.

"Consumption is a good indicator of economic growth at the bottom of the pyramid, while investment indicates growth at the top," Sitapati explained. "If consumption doesn't grow, it tends to indicate that the bottom of the pyramid is not growing as fast."

Sitapati argues that the government needs to prioritise policies that stimulate domestic consumption alongside investments in infrastructure. He believes that a dual focus on these areas can create a more balanced and inclusive economic growth trajectory.

Rural Push

One of the key areas where Sitapati sees potential for improvement is in rural infrastructure. He suggests that the government should increase its investment in rural areas to enhance infrastructure and provide direct financial support to rural consumers. This, he believes, would address both structural and cyclical challenges that have hampered consumption growth, particularly in the aftermath of the COVID-19 pandemic.

"The COVID impact had a recessionary effect on the bottom of the pyramid, and my suspicion is we've not fully come out of it," Sitapati noted. "Government investment in rural infrastructure and targeted disbursements like the PM Kisan scheme can put money directly into the hands of rural consumers, boosting their purchasing power."

Sitapati also pointed out that the disparity between consumption and GDP growth is exacerbated by rising inequality, a phenomenon observed globally. He advocates for the redeployment of buoyant tax collections into more welfare programs and rural infrastructure projects. "The top 20 per cent of India can help the remaining 80 per cent do better through strategic redeployment of resources," he said.

As the head of a leading FMCG company, Sitapati remains optimistic about the sector's potential. However, he stresses that for the FMCG sector to reach its full potential, domestic consumption needs to grow more robustly. "India has a fast-growing economy but a mid-growing consumption economy. We need domestic consumption growth to go from about four to six to seven percent," he stated. "If GDP is eight, and domestic consumption is at seven, it would create a virtuous cycle for India."

Sudhir Sitapati’s journey

Sudhir Sitapati is the Managing Director and CEO of Godrej Consumer Products, a leading player in India's fast-moving consumer goods (FMCG) sector. With a career spanning over two decades, Sitapati is recognised for his strategic vision and leadership in the industry.

Before joining Godrej, Sitapati held various senior positions at Hindustan Unilever Limited, where he significantly contributed to the company's growth and success. His expertise in marketing, brand building, and consumer insights has been instrumental in driving innovation and expansion at Godrej.

Sitapati is a strong advocate for leveraging India's domestic consumption potential to fuel economic growth. He stresses on the importance of rural infrastructure and targeted welfare programmes to enhance the purchasing power of rural consumers. Under his leadership, Godrej has also focussed on harnessing India's advertising talent, establishing its internal agency, Lightbox, to create a strong brand presence.

A thought leader in the FMCG sector, Sitapati's insights and perspectives are highly regarded. His commitment to sustainable and inclusive growth reflects in his strategic initiatives and policy recommendations, making him a key figure in shaping the future of FMCG industry.