Rural agri wages, a significant proxy for consumption demand, had grown at 5.4% in Q2-2019, 6.1% in Q1, 4.7% in Q42018 and 3.1% in Q32018.
Wage growth for rural agricultural labourers slipped to four-quarter low of 4% in the third quarter of calendar year 2019, a Nomura report said, in what could cement the perception that a revival of the demand in the economy is getting delayed. The rural agriculture wage growth fell sharply from 5% in July to apparently negative territory in September, ahead of the Diwali season.
Rural agri wages, a significant proxy for consumption demand, had grown at 5.4% in Q2-2019, 6.1% in Q1, 4.7% in Q42018 and 3.1% in Q32018. Stating that consumption demand was still in the red, Nomura said, “among less cyclical indicators, diesel consumption and rural wages continue to disappoint, suggesting endemic weakness persisting in urban and rural segments”.
It added that data on investment demand remained lacklustre too, with all indicators significantly worse in October. While a further deterioration was seen in railway traffic on a net tonne/km basis – the annual growth in this segment plunged from 0.9% in Q2-2019 to (-)7% in Q3 –, the volatile public capex slowed sharply.
“After 2016, there has been hardly any growth in rural wages. So, it’s a picture of stagnant rural wages,” said noted economist and former Planning Commission member Abhijit Sen. The drop in the rural wage growth rate is impacting domestic passenger vehicle sales, sales of two-wheelers and tractors. Passenger car sales contracted 23.7% in September. The sales improved, apparently transiently, in October (up 0.3% y-o-y), due to the Diwali season.