Good monsoon, govt support could revive rural demand -Ratna Bhushan & Sagar Malviya

-The Economic Times

 

Forecast of a normal monsoon and extension of PM Kisan scheme likely to boost rural income, say cos.

 

NEW DELHI| MUMBAI: Rural demand for groceries and daily essentials, which showed signs of slowing in the past three quarters, could revive after New Delhi extended the assured income support (PMKisan) scheme for farmers. Expectations that rains would be normal this monsoon season should also lift buying power in the villages.

The federal cabinet, in its first meeting after Prime Minister Narendra Modi returned to power with a stronger mandate, last week decided that the government would cover 145 million farmers under the PM Kisan scheme, and irrespective of their land holdings will transfer Rs 6,000 to their bank accounts. The revised programme will now cover 20 million additional farmers.

“Higher MSPs and rural stimulus would put more money in the pockets of rural consumers and boost consumerism. The liquidity situation in the market is improving now and a repo rate cut would further improve the situation,” said the homegrown packaged consumer products company Dabur India’s chief executive Mohit Malhotra.

The maker of Vatika shampoo and Real juices, which derives 45% of its overall domestic sales in the rural areas, however flagged unemployment as a concern. “The unemployment rate continues to be high and the government must take decisive steps now to address this issue,” Malhotra said.

The India Meteorological Department (IMD) has predicted a normal June-September monsoon, while private weather forecasting agency Skymet has pointed to a below-normal monsoon, at 93% of the long period average.

Consumption in rural India, which accounts for about a third of the market, has lately outpaced the rate of expansion in cities. Over the past two years, rural growth rates were nearly double of those in urban areas, which have moderated to about 1.1 times last quarter.

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