Rural consumption, which had been registering a steady and healthy growth till recently, has witnessed a slightly muted growth in the third quarter of this fiscal and is expected to remain flattish in the fourth quarter as well. However, we expect a good recovery in demand from rural and semi urban markets in FY-25 backed by election spending and increased thrust on infrastructure sector by the government leading to better roads and improved connectivity.
Since the general elections are due this year, the Interim Budget that will be presented on Feb 1 will be a Vote on Account and hence we do not expect any big bang announcements in the Interim Budget. However, in the Interim Budget ahead of the general elections, it is expected that the government may focus on rural development and social welfare schemes with a clear view to boost consumption and fuel the Bharat growth story which is likely to reflect in terms of higher demand by the first quarter of next fiscal.
If the monsoon remains normal then we expect a healthy recovery in rural demand next fiscal. The government has been taking a number of measures to help the farmers and this is likely to lead to better farm productivity and higher realisations leading to increased incomes. The non-farm incomes have also been growing steadily on the back of an increase in real estate and road construction activities. All this will augur well for the rural economy leading to higher demand in the coming days.
“As the country is expected to clock an exponential growth supported by strong macroeconomic fundamentals, the anticipated recovery in rural demand backed by higher election spending and increased thrust on infrastructure coupled with an increase in farm income, is expected to augur well for growth across the country, particularly in the under penetrated markets of rural and semi urban India,” Mr Shreeram Bagla, MD, Annapurna Swadisht said.