The positive story of the rural sector has softened the pandemic-induced blow to the economy so far, said economists, but the “only silver lining” in the ongoing fiscal year is unlikely to move the needle any further.
While improvements in rural demand will increase the sector’s share in quarterly figures of gross domestic product, those are insufficient to further cushion the impact of the pandemic and take the economy to ‘near zero’ growth this fiscal year, according to economists ET spoke to.
“The growth in the rural sector is the reason we are estimating not more than a 9-10% contraction in FY21,” said Arun Singh, the global chief economist at Dun and Bradstreet.
With other sectors of the economy still in the red, growth in rural demand implies it will have a larger impact on consumption, especially in the third quarter which captures both the festive and marriage…