Conflicting signals have emerged about the state of the rural economy. The precise level of both prosperity and livelihoods at this stage of the pandemic in rural India is crucial in order to gain an understanding of the path of the recovery in the overall economy. On the one hand, corporate guidance and statements in recent days have suggested that there is strong rural demand, driven in part by good monsoons. Fast-moving consumer goods companies in particular have highlighted that rural demand held up better during the lockdown period than urban demand did — where, of course, the lockdowns themselves were more stringent. Many industry leaders have already said that rural demand has never been stronger. In the quarter in which the economy shrank almost 24 per cent, agriculture showed positive growth. The wage data that has recently been released, as quoted in an HSBC report, shows that rural wages rose 8.7 per cent year on year in June, in nominal terms, similar to how much they rose in May. This would suggest that rural demand will be a crucial propulsion factor in future.
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