India's Consumption Riddle

Rural consumption in Q2 FY22 remained muted, while urban India saw robust increase. But it’s not time to take the wind out of sails yet.

- Ajita Shashidhar and Asmita Dey

RABINDRA DHAGGAD, a farmer in Ambanagar village of Madhya Pradesh’s Vidisha district had a bumper kharif crop for the second consecutive year. The 22-year-old commerce graduate, who took over his father’s farm, wanted to buy an SUV. With two years of good rains and the government marginally increasing minimum support prices (MSP), Dhaggad saved enough to afford his dream car.

But since then, Dhaggad has postponed his SUV plan indefinitely. “Fuel prices have risen over 90%, so have fertiliser prices. I am not sure when the recent fertiliser subsidy announced by the government will actually benefit us. Therefore, I need to be cautious... Saving enough money for healthcare is a priority now. Many people lost their lives as they couldn’t afford quality healthcare,” says Dhaggad.

For Hemendra Kumar Kaaldev, a sugarcane farmer from Uttar Pradesh’s Jaffarpur village, the recent MSP [(in UP, it is referred to as SAP or state advisory price] hike of ₹25 per quintal is hardly reason for celebration. The three-fold increase in farm input prices has offset the MSP hike and the sugar mill he sells his produce to, refused to compensate him. “Sugarcane prices have not increased at the same rate. Diesel prices and electricity bills are shooting up and it is becoming difficult to manage. My production costs have gone up 10-15%. I am forced to cut down on monthly consumption to check expenses.”