Industry is optimistic about the prospects of growth in the Indian rural economy
The Confederation of Indian Industry (CII) in partnership with CRIF High Mark launched its Rural Business Confidence (RBC) Index, the first of its kind.
According to the Index, the Rural Business Confidence Score as of October 2021 is 63.9 and industry is very optimistic and upbeat about the prospects for the rural economy.
The survey undertaken across industry sectors in different geographies shows that 59% of respondents expect their organizations' order books to improve, with positive impacts on businesses in rural India. 48% of respondents expect the profitability of their organizations to improve, and 54% of respondents expect access to credit in the rural economy to improve. Additionally, according to the survey, 88% of respondents expect an improvement in digital penetration, 72% expect the quality of infrastructure to improve, and 72% expect government initiatives and policies to drive rural growth.
The Index further illustrates that despite the COVID-19 pandemic, over the last three years from FY 2018-19 to FY 2020-21, the disbursement of retail loans in rural India witnessed a 23% growth by value (from Rs. 10.10 lakh cr in FY 2018-19 to Rs. 12.45 lakh cr in FY 2020-21) and 30% by volume (from 506 lakhs in FY 2018-19 to 661 lakhs in FY 2020-21). The disbursement of commercial loans in this period, led by small-ticket loans, saw about 100% growth by volume (from 2.4 lakhs in FY 2018-19 to 4.9 lakhs in FY 2020-21) but 33% degrowth by value (from Rs. 7.25 lakh cr in FY 2018-19 to Rs. 4.83 lakh cr in FY 2020-21). However, MFI loans saw a degrowth of 9% by value (from Rs. 1.23 lakh cr in FY 2018-19 to Rs. 1.12 lakh cr in FY 2020-21) and 19% by volume (from 396 lakhs in FY 2018-19 to 320 lakhs in FY 2020-21) during the same period.
Talking about the launch of the RBC Index, Mr Chandrajit Banerjee, Director General of CII, commented, “CII firmly believes that creating geographically distributed economic growth centers, especially in rural India, is critical to promoting equitable and sustainable growth, and most importantly to achieving the vision of Aatma Nirbhar Bharat. The aim of this Index is to fill the information void by creating a mechanism that can capture how the rural economy is performing and support strategic decision making. We are delighted to have partnered with CRIF High Mark to develop this unique product and are confident that this will help all key stakeholders in creating new paradigms and chartering new pathways for economic growth in the country.
Mr. Navin Chandani, MD & CEO of CRIF High Mark, explained, “In India, two-thirds of the workforce live in rural areas, and the rural economy contributes to almost 46% of our national income. Undoubtedly, it is the backbone of India's economic progress. The COVID-19 pandemic has brought about a significant structural shift in the country and rural India has displayed exemplary resilience during this phase. With the next few years being critical for the country’s continued economic growth, it is imperative to have a holistic mechanism that can evaluate and forecast rural business confidence. Therefore, The Confederation of Indian Industry (CII) and CRIF jointly developed the RBC Index. An industry-first, we are certain that the RBC Index will play a pivotal role in equipping key stakeholders with the right data and insights that will further help in devising ways to boost our rural economy, ultimately creating a large-scale positive impact.”
“Today, more than ever before, the rural economy has become central to India’s $5 trillion economy and Aatma Nirbhar Bharat’s narrative. The Government has systematically introduced a slew of enablers to create a conducive ecosystem to accelerate growth. Because of this innate strength and potential, rural India today is beginning to witness the emergence of new players and new models to create the desired localized virtuous cycle of growth. We are confident, going forward, that the Index will act as a critical enabler for taking strategic decisions for the rural economy,” said, Mr Tarun Sawhney, Chairman CII National Council on Rural & District Economy and Vice Chairman & MD, Triveni Engineering & Industries.
The Rural Business Confidence Index is the first of its kind that aims to provide an outlook of rural business confidence for all stakeholders. It is a much needed and all-encompassing view of macro-economic factors affecting rural India, incorporating bureau data on rural credit and opinions from micro, small, medium and large corporations across different geographies and sectors.