India is witnessing a major boost in consumption worth Rs 3 lakh crore. This surge is driven by recent GST rate cuts, income tax reductions, and RBI interest rate cuts.
Impact of GST and Income Tax Cuts
According to HSBC Securities, GST cuts alone could save customers around Rs 1.5-2 lakh crore. Income tax reductions are expected to add another Rs 1 lakh crore in consumer savings. Analysts believe this combination will create a strong multiplier effect across various consumption sectors.
Consumer Spending Patterns
Current consumer spending is divided as follows:
- 39% on obligatory expenses
- 32% on necessities
- 29% on discretionary items
Experts expect incremental spending to tilt toward discretionary categories, benefiting sectors like QSR chains, online beauty platforms like Nykaa, and FMCG companies.
Stock Market Insights
HSBC has upgraded ratings for Britannia and Nestle India citing benefits from GST cuts. Rural demand has been recovering since H2FY24, while urban markets will benefit from both income tax and GST reductions.
Brokerage firms recommend stocks like:
- Marico
- GCPL
- ITC
- Nestle
- Britannia
- Jubilant Food
- Radico Khaitan
- Bikaji Foods
- Godrej Consumer
These companies are expected to benefit the most from the ongoing consumption revival.
Conclusion
The combination of GST cuts, income tax reductions, and lower interest rates is expected to drive strong consumer spending across India. Both urban and rural markets stand to gain, with FMCG, QSR, and online retail sectors emerging as key beneficiaries.
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