August 2020, South Asia 

Recent refrains on the Indian economy have centered around optimism on rural India. Even as rural India has been performing better than the urban sector, this may not sustain. Urban recovery is essential to pull rural growth too. Healthcare risks are also increasing with new Covid cases now getting skewed towards rural India.

The government’s stimulus plan should centre around spending on infrastructure to improve employment/income prospects in rural and urban India.

With a contribution of 45-50% to India’s GDP, expectations will be high from rural India to drive India’s growth, especially as urban India remains weak.

Procurement of wheat has been higher than recent years although the share in total production has not increased much. Centering rural growth on the agriculture sector would possibly miss more than half the story. Barring a few crops (for example wheat), farmers’ profitability has been broadly stagnant over the last few years.