July 2020, South Asia
Investors are banking on Bharat more than on India. The rural economy’s initial lift after the covid-19 catastrophe is the new driver of growth. A good monsoon, bountiful rabi crop and the government’s Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) are propping up the economy and giving it the much-needed jump-start after the lockdown.
All this is good. But some economists caution that the demand-pull from the rural economy may not have enough momentum to shoulder the larger Indian economy. This is primarily because rural jobs are at much lower wages than urban and non-agricultural jobs. Further, labour migration from the cities have slowed rural remittances. As a result, rural incomes are not enough to pull the growth forward.
Then again, escalating covid-19 cases in rural areas may become a hindrance. Smaller towns and cities including rural areas are still vulnerable to the pandemic, particularly as medical facilities are limited. Analysts are worried that this could be a spoke in the rural growth wheel.
