India`s rural demand vulnerable owing to higher food inflation, lower income: CareEdge Ratings
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CareEdge Ratings in its latest report has said the India’s rural demand is vulnerable and could be further impacted by the ‘dual blows’ of lower income and high food inflation owing to an erratic monsoon. It stated the upcoming festivities may lead to a rise in consumption demand but such an increase will depend on the extent of the skewed monsoon impact.
It mentioned monsoon has been deficient so far and there is no certainty if the situation will improve. Consumption, including rural demand, is considered an important factor influencing the overall GDP growth in the country. Some FMCG players have already flagged concerns on the rural demand front.
Further, it said the risk to farm income remains high as uneven distribution of monsoon has affected the sowing of certain crops and can adversely affect yields. It added the cost of living is also rising due to high food inflation and expected hit to agriculture due to an erratic monsoon. Besides, it said the risk to rabi -- the winter crop sowing -- remains high as reservoir levels remain significantly below the 10-year average in eastern and southern India.
