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Resource centre on India's rural distress
 
 

The awkward myth of a revival in the country’s rural economy -Himanshu

-Livemint.com

Low incomes and poor farm-gate prices capture the reality of relentless distress in our hinterland

National accounts data released last month estimated that the economy has contracted by 7.5% in the second quarter of 2020-21 compared to last year. For many, this was a sign of recovery, given expectations that India’s gross domestic product (GDP) would contract by around 10%. It is, no doubt, an improvement from the 23.9% GDP decline in the first quarter. Much of the euphoria over this so-called recovery was attributed to a revival of the rural and agrarian sectors.

Unfortunately, our quarterly GDP estimates can’t provide any hard evidence of a rural revival, given their dependence on organized corporate-sector data. While we have no rural- urban break-up of growth, the fact that the majority of the unorganized sector is in rural areas makes it even more suspect to say anything on the rural economy. This is corroborated by a preliminary reading of some reliable indicators of the rural economy, suggesting that euphoria over its revival is not based on facts. The two most important of these indicators available on a monthly basis are of rural wages and wholesale prices of agricultural commodities.

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