American brokerage BofAML today said it expects a pick-up in the note ban affected rural demand from October this year. The second consecutive bumper crop on good monsoons, farm loan waivers, and lower agriculture input costs will help revive the rural demand, the Bank of America Merill Lynch note said. “We see a strong pick up in rural demand as the autumn Kharif harvest comes in October. We had turned bullish on rural demand in July 2016 after being bearish since early 2012. While 2016 Kharif farm income jumped 23.3 per cent, rural demand was hurt by the demonetization shock,” it said.
It estimates the incomes from the summer crop to rise 5.3 per cent this year on good rains which are going 101 per cent of the normal that should result in the second consecutive bumper harvest, after multiple years of drought impact. The only worry pointed out in the note is a drop in the sowing of oilseeds. On the farm loan waivers, it said we have already seen benefits totaling USD 18 billion that have been announced and reiterated that the same will grow to USD 40 billion as we approach the 2019 elections, helping the rural economy. The lower global oil prices will be the biggest help in lowering the input costs for agriculture, it said.