India Economy Watch – Decoding Consumption

An analysis of 12 proxy indicators suggests that rural consumer spending fell for the third consecutive quarter in the fourth quarter of fiscal 2024, marking the worst level in 33 quarters.

Rural spending fell 3.1% year-on-year in the fourth quarter of FY24, after declining 2.0% year-on-year in the third quarter of FY24 and 2.0% year-on-year in the fourth quarter of FY23 .6% compared to the previous year. This was mainly due to a second consecutive decline in real fiscal rural spending, continued deterioration in reservoir levels, agricultural exports and tractor sales, as well as the worst decline in fertilizer sales since the first quarter of fiscal 2014, as well as subdued wage growth returned to the country.

They outweighed improvements in two-wheeler sales, decent growth in farm terms of trade and farm real credit.

As a result, rural spending contracted 1.3% y-o-y in FY24 – the worst decline since FY99 and the first decline in eight years – compared to 4.8% y-o-y growth in FY23.

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