Defying demonetisation, nominal rural
agricultural wages growth rose to 7.3% in November on year-on-year basis, largely owing to hike in minimum wages announced by the government in September last year, financial services major Nomura
said in a report.
Interestingly, the report said that the steady wage growth
suggests a likely release "of pent up demand
agricultural wages growth rose to 7.3% year-on-year in November 2016 (the month demonetisation
was announced) from 6.9% in October, remaining well above the previous 12-month average of 4.8%," Nomura
said in the report.
"We expected rural wage growth
to moderate in November as we thought demonetisation
would hurt the more cash-reliant rural economy
(two-wheeler sales did indeed decline by 5.9% year-on-year in November and by 22% in December)," it added.
of Rs 500 and Rs 1,000 currency notes came into effect from November 9, 2016.
According to the financial services major, rural
wages may have defied this demonetisation
effect because of hike in minimum wages announced by the government in September 2016.
Further, the report said that "the resilience of nominal rural
wage growth, despite demonetisation
and amid lower inflation ( that is higher real wages), suggests that the current slowdown in rural demand
is transitory and could give way to a sharp release of pent-up demand
once the economy
is sufficiently remonetised, which we expect by end-March."
Rural wage growth
has only recently started to trend higher, after almost two years of stabilisation, it noted.