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Good Monsoon, Consumption To Help Rural India Stay Afloat, Post Deadly Second COVID-19 Wave

During the deadly second wave of the Coronavirus pandemic, rural areas were also impacted severely, however, it also witnessed a strong rural consumption in July-21, and growth yet again outpaced Urban.

Photo Credit : Reuters


Rural India has a huge amount of casualties because of the COVID-19 pandemic, especially the deadly second wave. However, with a good monsoon, with documented foodgrain manufacturing and buffer shares from 2020-2021, it is managing to recover from the devastation. 

Akshay D'Souza, Chief of Growth and Insights, Bizom - The Retail Intelligence Platform said, "Ever since the first wave of the Pandemic, rural sales have significantly contributed towards consumption and Fast-moving Consumer Goods (FMCG) growth in India. This was mainly because the rural areas were relatively unaffected in the first wave of the pandemic while large urban cities were impacted." 

The good monsoons rural India witnessed last year were the major factor that drives the Agri income, ahead of the festival season. "Another key contribution was good monsoons last year which was among the key factors driving Agri income especially in Rural India as we enter the festival season," D'Souza added. 

During the deadly second wave of the Coronavirus pandemic, rural areas were also impacted severely, however, it also witnessed a strong rural consumption in July-21, and growth yet again outpaced Urban. 

In the month of August, the daily grocery consumption and essentials in rural areas have surpassed cities in July, as compared to the trend of June. After two years, urban growth was more than rural areas for the first time in approximately two years in June. However, as the COVID-19 guidelines are easing and good monsoon rain, rural growth is likely to make a comeback and be in line with urban growth going forward. 

There are strong tailwinds that could continue to drive consumption in rural areas. According to the India Meteorological Department (IMD) overall rainfall is showing just 5 per cent below normal across India from 1-June 2021-15th Sep 2021). He said, "This could further improve as the month progresses. Among the 10 states that have deficient or large deficient rainfall (Gujrat, Odisha, Kerala, Punjab, etc.), there is no visible impact on FMCG sales indicating incomes remain stable."

Almost 85 per cent of FMCG sales are through Kirana’s in India. Hence, any disruption to them leads to growth being directly affected. In the second wave, India witnessed on average almost a 20-35 per cent higher number of Kirana outlets every month between May 21 to July-21 as compared to the same time last year.

"In August 2021, we saw the number of Kirana stores in Rural have gone up by 1.8 per cent Month on Month (MoM). This is higher than urban growth and has now reached its highest levels of 2021. This clearly indicates that distribution and trade across India remain on a strong foundation," D'Souza added. 

Amid the speculations of the possible third wave of COVID-19 pandemic, more than 50 per cent of the Indian population (Over 76cr people) have got at least 1 dose of the vaccine in India as of  September 16. 

This could increase home consumption driven by higher social interactions as we approach the upcoming festival season, D'Souza said. 

As almost every Indian city has unlocked and travel restrictions are ease-out, India is also witnessing the travel movement. 

D'Souza said, "While Rail travel services still remain lower than before, they have now started picking up. This is a critical driver for consumption across many FMCG categories including packaged foods, beverages, personal care, etc. All of this coupled with festivities across India over the next few months should help drive strong consumption across rural India."

Tags assigned to this article:
economic recovery gdp india india economy rural demand