Green shoots of growth in rural India could drive economic revival
There is optimism with expectations of a normal monsoon, record sowing of summer crops and an improved winter harvest
Businesses in India are banking on a bumper harvest and high rural income to fuel a demand for goods and lead India’s economic revival in the aftermath of Covid-19, a report in the Hindustan Times has said.
Economic growth and demand in the cities slowed down following the closure of offices and factories after the countrywide lockdown imposed on March 25.
But the emergence of green shoots in the rural economy suggests that the pessimism surrounding India’s economic growth may be overdone, economists told the Hindustan Times.
The optimism is based on expectations of a normal monsoon, record sowing of summer crops and an improved winter harvest in addition to the impact of government measures to help the agricultural sector and boost rural incomes.
An important bellwether for the rural market is the sale of tractors and this is headed for a record growth in June, according to industry executives.
The report quotes a top executive of Mahindra and Mahindra, the country’s largest farm equipment manufacturer, as saying that the demand was robust due to a variety of factors. These included a strong Rabi (winter crop) output, good price realisations and higher government spending in rural India.
Two-wheeler manufacturers also expect an uptick in customer sentiments. It is worth noting here that a bulk of sales for the country’s leading two-wheeler makers comes from the rural market.
According to the report, Chief Policy Adviser EY India DK Srivastava believes that the share of agriculture in the country’s national income is likely to go up by about 2 percentage points this fiscal. The farm sector accounts for about 15% of India’s gross domestic product (GDP).
The rural economy should be more robust this year than normal, he said, adding that one should not be carried away by the extremely negative assessment of some of the multilateral agencies.