As a big boost to India’s consumption story, the Cabinet has cleared the 7th Pay Commission’s recommendations to hike salaries of government employees. Speaking to Bloomberg TV India , Future Retail’s Joint Managing Director Rakesh Biyani says the ₹1 trillion of extra pay flowing into the market will definitely boost consumption as there will be little savings.

The company is also waiting for States to adopt the Model Shops and Establishment Act to roll out 24x7 stores in high streets, residential areas and transport hubs, he said. Excerpts:

Twin boost coming in with the nod to pay panel report and Model Shops and Establishment Act… How big an opportunity is this for consumption-oriented companies?

When you have more than ₹1 lakh crore getting released into the market over the year, it will definitely help lift private consumption. And I think there are two aspects to it. In the arrears, where a pool of money will come in, I think people will look to buy some of the big-ticket items they have been postponing so far, such as white goods and automobiles. And in some cases, we see good growth in home-related products.

And as we go into the festive season, even categories such as apparel will definitely end up seeing good growth. So it is a substantial amount of money. And clearly even the government is hoping that it will help increase the consumption in the market.

When the 6th Pay Commission report was implemented in 2008, did you see an uptick in consumption?

They events cannot be compared. The Sixth Pay Commission happened almost eight years ago. But if you want to zoom back to that period, I would say that the retail sector in the country actually had one of the finest periods from 2008 to 2009.

And a part of it was also because of the release of the funds, including arrears, at that point of time. It is clear that it is not comparable anymore. But there is a substantial amount of cash coming into the system. People are going to consume it and not all will go into savings.

The other big boost is the nod to the Model Shops Act. Stores are now allowed to be open 24x7 throughout the year. Are you looking to cash in on this opportunity? What kind of incremental benefits do you expect from this?

I think it is a welcome change. Removing hindrances for doing business is always welcomed. As and when the States start adopting the policy, we will reach out to our consumers, look at the market places and identify the stores where there is a demand from consumers to have longer operating hours. And we definitely look forward to taking this opportunity to open more stores. Though, a lot of work needs to be done to create a balance between additional cost and customer convenience. Stores located around busy high streets, residential areas and transportation hubs can easily be opened for longer trading hours. Will that be 24 hours, 18 hours or 20 hours a day? I think we will make a decision we come closer to implementation.

Future Group sold 14 per cent stake in Future Supply Chains to Griffin Partners. What was the rationale behind the deal?

This was going on for some time. We have always maintained that as and when our assets become mature, we will look at monetising them. Future Supply Chains is one of those assets. We will use the money coming out of that to reduce the debt level.

Related Topics