NEW DELHI: Growth in India's fast moving consumer goods ( FMCG ) sector is declining as lower spending in urban centres and slowdown in rural growth crimp consumption, according to market research firm Nielsen.The country’s largest market researcher on Wednesday said value growth in the FMCG space in the April-June quarter of 2019 dropped to 10% from a year ago. It was also the third consecutive quarter of slowdown. The Q2 growth numbers follow softening from the third quarter of last year when the sector registered 16.2% growth, it said.Revising its forecast for the year, Nielsen said FMCG growth for the first half of 2019 stands at 12% against its earlier prediction of 13-14%.“Based on an analysis of key factors, a revised forecast for the year-end of 2019 estimates all-India FMCG growth to be in the 9-10% range,” Sunil Khiani, Nielsen’s South Asia head of retail measurement services, said. Within this, the food category is expected to grow 10-11% while personal care and home care segments are expected to grow by 7% and 8%, respectively.Consumer facing companies said growth forecasts are lower than what they expected earlier. “Distributors generally operate on cash but during elections they were cautious to transact or carry higher amount of currency.This affected trade especially in smaller towns,” said B Krishna Rao, senior category head at Parle Products , which gets more than half of its sales from rural markets. “With good monsoon and a stable government, the situation may improve, but growth rate expectations are lower now than what we envisaged during the start of the year."According to Khiani, at the beginning of the year there was softening driven by essential and impulse food categories. “However, this quarter has witnessed a slowdown across all food as well as non-food categories, with salty snacks, biscuits, spices, soaps and packaged tea leading the slowdown,” he said.Nielsen cited four key factors impacting growth-—macroeconomic, government policies, monsoons and a low base effect.“There is a looming concern on increasing inflationary pressure, which was at 1.9% at the beginning of the year and has already moved up to 3.18% in June this year,” he said.Vivek Gambhir, MD, Godrej Consumer Products , had told ET last week that “over the last few quarters, FMCG in rural has grown ahead of urban. However, the pace of rural growth has been slower than historically, when rural was growing more than twice the growth of urban. Our hope is that the government’s efforts to revive the rural economy should lead to better rural growth in the second half of this fiscal year. To deal with the slowdown, we are focusing on driving volume growth through new product launches and consumer offers, as well as fast-tracking growth in alternate channels such as modern trade and e-commerce.”The Nielsen retail panel data outlines two key contributors to the overall slowdown in the FMCG sector—rural growth losing steam and fading advantage of small manufacturers.“The FMCG growth trend is dampened by volume-led growth, which has moved 3.6% points down from 9.9% in Q1’19 to 6.2% in the second quarter of the year,” it said.Rural India accounts for 37% of overall FMCG spends and has historically been growing at 3-5% points faster than urban on account of increasing affordability, availability and demand.However, rural growth is slowing down at double the rate of urban in recent quarters. This has brought rural growth closer to urban growth in Q2’19, according to Khiani.Nielsen also said the degree of decline in growth for small manufacturers post the goods & services tax (GST) implementation has resulted in an overall contribution of 50% to India’s slowdown story.The market researcher said the slowdown is driven by the north and west zones, where growth has come down to single digits in Q2’19. Haryana, Madhya Pradesh, Uttar Pradesh, Maharashtra and Assam are leading the slowdown.It said the rural slowdown in these markets is reiterated in key macro-economic indicators including slowdown in rural output, reduced government spending, and untimely rain impacting crops in most North Indian markets.