Warning signs across FMCG, tractors & 2-wheelers, gold, real rural wages
THE GOVERNMENT Friday claimed that a significant divergence in levels of consumption and direction of change prompted it to withhold the findings of the survey on household consumption expenditure for July 2017-June 2018. But all major indicators of rural demand suggest the situation has only worsened since the beginning of financial year 2019-20, and the economy is yet to see the end of the current slowdown cycle.
The Indian Express spoke to business leaders across key industries to find that all indicators of rural demand — sales of FMCG, and of tractors and two-wheelers, in non-cities — show they are still riding the trough. Other indicators, such as a sharp fall in gold imports in the last four months (half of gold demand is rural-driven) also point to slackening demand.
The most critical factor behind rural stress is not just the fall in nominal wage rates of labour. With CPI rising for rural labourers, real wages since March have also seen a decline. The real wage growth, adjusted for CPI-RL (Consumer Price Index-Rural Labourers), has seen the sharpest erosion in August. With CPI-RL at 6.23%, even if nominal wages increased 3.4% in August, real wages eroded by 2.83%.
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