India's fast-moving consumer goods sector grew 5.7 per cent by value and 4.1 per cent by volume in the July-September quarter driven by rural demand, consumer intelligence firm NielsenIQ said in its quarterly update last week. Yet, many feel that the state of India's rural economy, particularly rural indebtedness, is a matter of concern. Some non-banking financial companies (NBFCs) are complicating the scene further by trying to fish in troubled waters.
The Reserve Bank of India (RBI) has taken note of the growing issue of "push" loans - loans that are aggressively marketed to individuals who may not fully grasp the long-term financial consequences. This is mostly happening in rural India, and a slew of factors is leading to unsustainable levels of debt.
One of the root causes is the lack of sufficient employment opportunities in rural India. Economic growth has not translated into adequate job creation, especially in non-farm sectors. Meanwhile, the ease of access to credit, combined with the proliferation of 24/7 delivery services, has fuelled higher consumption levels in rural pockets. This consumption is often beyond what individuals can afford, creating a significant gap between the growth in income and rising consumption needs. People are being lured into taking loans for goods and services that are not essential, further pushing them into debt.
As a result, rural households are increasingly depending on borrowed money to meet everyday consumption needs, a practice that is not sustainable in the long run. The problem is compounded by the fact that the income sources of the rural economy, which is largely dependent on agriculture, are unstable, affected by unpredictable monsoons, fluctuating commodity prices, and rising input costs. Instead of being mindful of this, some NBFCs are capitalising on this mismatch, providing loans for consumption, sometimes at usurious rates.
This story is from the November 11, 2024 edition of Business Standard.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the November 11, 2024 edition of Business Standard.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
CESS AND SENSIBILITY
Southern states say cess and surcharge eat into their share of resources, urge 16th Finance Commission to consider contribution to national economy
India's transport future balances fossil fuels and clean tech
Fossil fuels will continue to play an important role in India's transportation sector, even as alternative fuel technologies see multifold growth.
Over 6K pollution plaints in Delhi since Oct 2021; 38% still unresolved: CPCB
Delhi registered 6,170 complaints related to air pollution between October 15, 2021 and November 19, 2024, with 2,333 (38 per cent) of these remaining unresolved, according to data from the Central Pollution Control Board (CPCB).
Indians see wallets drain by ₹485 crore in 'UPI scams' in FY25
Over 600,000 incidents of fraud have been reported in the ongoing financial year till September
Future of television is smart and networked
The smart TV market has been stagnant. Is Dor the disruption it needs?
Centre spent ₹3,623 crore on crop residue mgmt since 2018: Environment minister
Since 2018, the Centre has spent ₹3,623.45 crore on crop residue management in Delhi, Punjab, Haryana, and Uttar Pradesh, with ₹1,681.45 crore allocated to Punjab, the highest among the states, Union Minister of State for Environment, Forest and Climate Change Kirti Vardhan Singh said in the Lok Sabha.
Silver prices as volatile as stocks: Should you pick gold or silver?
A Motilal Oswal Private Wealth (MOPW) report released on November 25 shows that between 1990 and October 2024, silver's price has been just as volatile as Indian stocks.
Tech stocks gain as recovery takes hold
Nifty IT index hits all-time high as IT outlook turns positive
Adani group stocks settle in red
UNDER PRESSURE
Enviro Infra booked 89.9 times on last day
The initial public offering (IPO) of sewage treatment solutions provider Enviro Infra Engineers was subscribed 89.90 times on the closing day of bidding on Tuesday.