India looks to rural sector to rescue virus-ravaged economy
Published On: Monday, November 9, 2020 | By: Team KnowMyStock
India’s economy suffered badly by the pandemic is drawing energy from one of its rather unexpected engines: farmers. Business leaders, policymakers, and politicians alike are pinning hopes on the rural sector as bountiful rains have set the stage for another year of record crops. Higher disposable incomes with farmers are expected to boost demand from automobile to cement to gold jewelry. That contrasts with the urban areas, where companies are still struggling to boost their sales following the pandemic that has hit business activities, hurt demand, and caused labor shortage. The adverse impact of the world’s strictest lockdown in March continues to haunt, but the hinterland is holding out hope.
Maruti Suzuki India Ltd. and the Hyundai Motor Co., the two main players in India’s car market, said October sales were the best-ever for any month. Hero MotoCorp Ltd., the world’s largest maker of motorcycles and scooters, as well as smaller rival Bajaj Auto Ltd., reported record sales, as rural markets provided a cushion against a downturn in cities.
“Despite Covid-19 and the related lockdown, the agricultural activities across the country have almost remained unaffected. This has raised the hope that rural demand could drive the economic recovery,” according to India Ratings and Research Ltd., a unit of Fitch Ratings Ltd.
Some companies reported strong demand for their products and services, such as automobile, cement, steel, tires and jewelry, in rural areas.
Rural demand will perk up somewhat, but will not be able to offset the shortfall in urban demand because the share of agriculture in gross value added of the Indian economy ranged between 14.6% and 17.8% during 2012-13 to 2019-20, according to India Ratings and Research.
Some experts highlighted that India is witnessing an uneven recovery, where upper-income groups are seeing a rapid and strong improvement in their economic conditions, while those with lower incomes are losing ground.
We are on Telegram!
JOIN our telegram channel to receive updates on Financial News and Stock and FNO Tips.
Click Here!
Follow Us On:
