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LATEST NEWS UPDATES | Rural distress can't get buried in growth story -Himanshu

Rural distress can't get buried in growth story -Himanshu

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published Published on Jun 20, 2018   modified Modified on Jun 20, 2018
-Livemint.com

Despite claims of an economic recovery, rural wage growth of non-agricultural labourers continued to be in negative territory for the fourth month in a row

Data released by the Central Statistics Office last month suggested a recovery in economic growth during the fourth quarter of 2017-18, with the economy expanding by 7.7% compared to that in the first quarter, when growth was at its lowest at 5.7%. This has given some cause for celebration in an economic situation where most other indicators were suggesting the economy was heading into some sort of crisis.

But a second set of data released by the Labour Bureau that tracks rural wages shows that not all is well as far as the rural economy is concerned. Despite claims of an economic recovery, rural wage growth of non-agricultural labourers continues to be in negative territory for the fourth month in a row. The wage data is now available up to February 2018 and it shows that real non-agricultural wages have been declining since November 2017. While real wages of agricultural labourers have moved out of negative territory after declining for two consecutive months, the growth at 0.2% is negligible.

It is not just the overall story; the trends, too, present a contradiction. Real wages for agricultural labourers were growing at 5.3% in June 2017. Since then, the growth rate of wages continued to decline every month before turning negative in December. The story for non-farm labour is the same, with wage growth turning negative since November 2017 after declining from 4% in June 2017.

Clearly, whether the economy is doing well or not depends on which India is being talked about. It also shows that rural India, or Bharat, is not keeping pace with the rest of the Indian economy.

Contradictions have always existed, but these seem to have widened over the years, with inequality rising secularly since the 1990s. But it is not just about inequality. The misery is no longer about rural India growing slower than the rest of the economy; it is now a story of acute distress and misery, which has intensified in the last four years. If nothing else, farmer’s unrest in different parts of the country only strengthens the story of rural distress.

While the trend in revival of growth rates may have given rise to temporary cheer, inflation data released last month suggests the cloud of uncertainty is still lurking, with inflation rising to 4.9% in May 2018. More worrying, core inflation was at 6.2%, above the threshold limit of the Reserve Bank of India.

Food inflation continues to remain low at 3%, but behind it is the story of the collapse in prices of major agricultural commodities. The collapse of sugar prices has already threatened many lives; similar is the case for several other crops, including pulses.

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Livemint.com, 19 June, 2018, https://www.livemint.com/Opinion/ii1TGo0T5bbocHOVM2Yj2K/Rural-distress-cant-get-buried-in-growth-story.html


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