Growth in the agriculture sector came in at 4.5% for the Jan-March quarter
Rural India is helping to revive the country's economy
Rural India is helping to revive the country's economy.
Gross Domestic Product data released on Thursday by India's Central Statistics Office showed growth of 7.7 per cent in the January to March quarter, helped by growth in the agriculture sector. This meant that India has retained its title of being one of the world's fastest growing major economies. Growth in the agriculture sector came in at 4.5 per cent for the quarter.
“The upswing was strongly supported by agriculture doing better-than-expected,” says Kapil Gupta, an economist at Edelweiss Research, a financial services company based in Mumbai.
Food grain production is projected to have reached a record high in the year from July 2017 to this month following decent monsoon rainfall in 2017, government figures show. The agricultural crop year is from June to July.
The latest data shows India's GDP expanding at the highest levels since the government's controversial demonetisation move in November 2016, which hit the heavily cash-dependent rural parts of the country particularly hard. The majority of India's population lives in rural areas, where farming is by far the main source of income.
GDP growth in the financial year to the end of March stood at 6.7 per cent, according to the government's figures.
State governments in India, including in Maharashtra and Uttar Pradesh, have announced loan waivers to help support farmers. The government's union budget for the current financial year is heavily skewed towards to the rural population, in an effort to help it win crucial votes in the general election, due to take place next year. The government has promised to double farmers' incomes by 2022.
“Policy makers and India Inc are coming together to help farmers and the other stakeholders in the agriculture sector,” says Siddhartha Choudhary, the chief executive of DestaGlobal. an Indian e-commerce and information company for the agriculture. “Agriculture-friendly policies, investment in building agri-infrastructure, and ensuring that the best products are made available at the right prices and at the right time are of utmost importance.”
A forecast for good monsoon rains this year is helping to boost expectations that the rural economy can continue to help spur the country's uptick in growth.
“A normal monsoon in 2018 and benign interest rates would support growth, together with the government’s thrust on rural and infrastructure sectors,” according to analysts at Crisil, an Indian ratings and research firm which is part of Standard & Poor's.
In particular, Crisil highlights that it is the rural population that is expected to drive an 11 to 12 per cent increase in revenues for companies in India's fast moving consumer goods sector in the current financial year, amid rising disposable incomes.