Rural Spend Up, Brings Cheer To Policymakers, India Inc

“The acceleration was mainly led by an improvement in real agricultural wages, which grew at a 25-month-high pace,” the financial services firm said in its note. That apart, analysts said government schemes and infrastructure development have also led to the growth in rural spending.

Higher rural spending will be key to supporting economic growth, especially amid heightened global risks. 

About 65 per cent of the country’s population lives in rural areas, and 47 per cent of the population is dependent on agriculture for their livelihood. To achieve the Viksit Bharat status, the government has been trying to create various schemes and programmes to prop up the rural economy, with access to electricity, drinking water and coverage under health insurance schemes.

India is largely looking at domestic consumption to support economic growth. “Though there are challenges, India’s macroeconomic growth dynamics remain strong and consumption in the rural sector has been increasing, which is a positive sign,” said Soumya Kanti Ghosh, Chief Economist, State Bank of India.

Increased Rural Spending Brings Cheer To India Inc  

A growth in rural spending would give a push to India Inc., especially the fast-moving consumer goods (FMCG) and consumer durable sectors. For example, India's rural markets accounted for almost 35 per cent of the overall FMCG sector sales, while the unorganised sector contributes to more than two-thirds of the total FMCG revenue, India Brand Equity Foundation noted.