India banking on poor farmers to revive economy during the pandemic

Leaders from the business industry, policy makers and politicians are banking on the rural sector for another year of crops. According to Bloomberg, “Higher disposable incomes with farmers are expected to boost demand from automobile to cement to gold jewellery.” This comes after one of the most stringent lockdowns of the world that was implemented by India in March 2020 as a severe measure to save the people from the novel Coronavirus. But, due to labour shortage, business activities and sales have taken a hit countywide. The only hope right now remains with the farmers. Companies like Maruti Suzuki India Lets. and a  local unit of South Korea’s Hyundai Motor Co. reported a record number of sales in the rural markets, as well as Bajaj Auto Ltd. during the pandemic. The hope now, is not the 144.5 million tons of food grains that were sown during this monsoon, supporting rural incomes. “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. According to India Ratings and Research, the demands for automobiles, cement, steel, tires and gold jewellery also went up in rural areas. Some farmers preferred to invest in gold. 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.