Blitz Bureau
NEW DELHI: The second quarter (July-September) of 2024-25 has begun with signs of quickening momentum in the Indian economy as an improvement in the outlook for agriculture and the revival of rural spending have turned out to be the bright spots in the evolution of demand conditions, according to the RBI’s monthly bulletin. With rural spending outpacing urban segments, the rural-urban divide is narrowing, as the recent monthly per capita consumption expenditure (MPCE) survey of the NSSO highlights.
This is on the back of rising fiscal transfers, an increase in the wage rate as typified by the MGNREGS and the rising volumes of remittances to rural households due to urban migration. These are some of the proximate factors that are boosting the effective spending power of rural households, the RBI bulletin states.
Consumption patterns revealed in the survey show that the share of conveyance, medical expenses and consumer services exceeds that of cereals in the rural MPCE. These developments have spurred hope that rural India is catching up with its urban counterpart and convergence can be envisaged, according to the report.
The rural recovery is yielding better results for companies in the fast-moving consumer goods (FMCG) segment, with earnings upgrades boosting stock valuations. This is reflecting an improvement in sales volumes as inflation haltingly moderates. Manufacturing is also gaining pace, with the purchasing managers’ index (PMI) having exceeded its long-run average in June on the back of new orders.
