EconSurvey
Rebounding rural demand augurs well for consumption in India
This story was originally published at 16:47 IST on 31 January 2025
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--EconSurvey: Consumption moving to svcs from mfg on high commodity prices
--EconSurvey: Rebounding rural demand augurs well for consumption in India
NEW DELHI – The rebound in rural demand due to better agricultural production in the current fiscal year augurs well for consumption growth in the economy, the Economic Survey for 2024-25 (Apr-Mar) said on Friday. The slowdown in rural demand had pulled down India's private final consumption to a three-year low of 4.0% in FY24.
"The impulse from rural demand is expected to continue in the second half of the fiscal year with the returns from a bumper kharif crop and higher MSPs (minimum support prices) for a prospectively good rabi crop," the Economic Survey said. Rural demand was sluggish in FY24 due to poor agricultural production on account of a poor monsoon driven by the El Nino phenomenon. This year, on other hand, farm output is expected to get support from the La Nina effect.
India's private final consumption is expected to grow 7.3% in the current fiscal year, according to the first advanced estimate released by the statistics ministry. The Economic Survey has attributed improvement in rural demand as a reason for this.
However, there are concerns about urban consumption demand this year, considering an underwhelming corporate sector performance in Jul-Sept. The Economic Survey is of the view that indicators of urban demand present a mixed trend.
Globally, there are some shifts happening in the consumption pattern, the survey added. "There are also early global indications that, given elevated commodity price trends, consumption is tilting away from manufactured items and more towards services." End
Reported by Krity Ambey
Edited by Akul Nishant Akhoury
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