After the government’s initiative to revive the sluggish economy, the Rural Economy is now in focus. Economists believe that the demand for the rural market will also have to be revived to completely slow down the country’s economy.
The future of the rural market, which is two steps ahead of the urban market in terms of demand, will be decided by the monsoon and the cost of their products to the farmers.
According to a study by domestic rating agency CRISIL, the rural economy has suffered a setback due to continuous monsoon skewer for the past two years. Meanwhile, the government’s spending on rural roads and affordable housing has given some relief to the sector which has created alternative employment and income opportunities.
However, with prices of agricultural products falling, the Rural Economy continued to see a fall in demand as the average annual income of farmers in the past two years, 2017 and 2018, remained stable at around Rs 65 thousand.
Marketing research agency Nielsen believes that the improvement in rural markets largely depends on the proper distribution of rainfall in the country. According to the agency, the sluggishness in rural markets has been double that of the urban market.
In general, growth in the rural market is three to five percentage points higher than the urban market. The growth of the rural market fell to 10.3 percent in the April-June quarter. It was 12.7 percent in the first quarter of last year.
The rural market growth of FMCG companies alone declined to 9.7 percent. According to Nielsen, the decline has been higher than in the rest of the regions, especially in the rural market in North India.
According to a report by Crisil’s Chief Economist Dharmkirti Joshi, the current state of the economy has become important for the agriculture sector as other important engines of growth, such as consumption, investment, and exports, are thinner.
However, the share of agriculture in GDP is only 14 percent. Despite this, the monsoon will be more important across the country this year. Because it will decide what the yield will be and what the farmers get.
However, the six thousand rupees under the Prime Minister’s Kisan Yojana may have some impact on the income of the rural sector. But the growth of the Rural Economy will depend a lot on what the market for agricultural produce prices is like.
The agency believes that if the prices of food products go up, the farmers’ income can stagnate.
R.C. Bhargava, chairman of Maruti Suzuki India Limited, the country’s largest carmaker, believes that Union Finance Minister Nirmala Sitharaman’s announcements will be a milestone in the strengthening of the economy. Within three to four months, there will be a surge in not only the automobile sector but all sectors.
But it needs to work fast in line with the announcements. The economy is stronger when every sector bounces. If the business in small units is affected, it will have an impact on the larger units also.
Bhargava said that the ban on the purchase of new trains for government departments has been lifted. The environment will be better than the announcement of pending refunds to the MSME sector in 30 days and future refunds within a time frame of 60 days already fixed.
For many years, the payment of government departments does not come. This leaves the companies back working. When the payment is made within the stipulated time, the companies will take a big part in the work. Bhargava said that the announcement of 70,000 crore rupees to public sector banks is also a major step towards strengthening the economy.
The notice has been issued to the taxpayers through a centralized system. All these announcements will have a rapid impact.