The much muted 7% y-o-y growth in private consumption clocked in the September quarter has surprised many as Q1FY19 had seen it bounce back nicely to 8.6% y-o-y, albeit on a favourable base. While private spends trended at around 7-7.5% y-o-y between Q1FY14 and Q3FY17 when it hit a high of 13.4% y-o-y, there was some deceleration post-demonetisation and GST. Given how currency in circulation remains elevated and is back at pre-DeMo levels, economists have attributed the subdued increase to distress in the farm sector. In particular, the very slow rise in rural wages is believed to be stymieing demand. There has been a fair bit of disinflation in the farm economy; even higher MSPs have not been able to boost food prices, and thereby, wages. Urban consumption appears to be holding up, possibly thanks to the higher salaries that government employees earn post the Finance Commission\u2019s recommendations. However, recent RBI consumer surveys have been uninspiring. Also, the December quarter has been quite slow so far and automobile sales have been very dull in what is a festive period. Moreover, credit conditions tightened in October and November, following problems in the NBFC sector, and could depress demand further. Indeed, the corporate results may have some hints on why consumption spends isn\u2019t more robust. The aggregate employee costs of BSE 100 companies has been stagnant at around Rs 1.2-1.4 lakh crore in the last four quarters; also, the data from Q2FY19 shows that 60% of the y-o-y increase was seen in just five companies. By all appearances, not too many jobs are being created, except in sectors such as IT and e-commerce. This is worrying at a time when investments remain subdued. While they grew a reasonably good 12.5% y-o-y in Q2FY19, much of this is attributed to capex by the government rather than by the private sector. Should investment activity by the government subside post the elections next year as the government works to repair the fisc, or even earlier if it runs out of resources, that would have a serious bearing on consumption. This would be particularly true for rural areas where several government projects are being implemented. Ideally, the private sector should step in to fill the breach, but it is severely hamstrung by the lack of capital. The few business houses that have the financial muscle to invest have been buying assets via the NCLT route. Economists noted that, in Q2, private-sector-led growth, or GVA (excluding agriculture and public services), slowed whichever way one sliced the data\u2014annual growth, sequential growth or contribution to GVA growth. While RBI must infuse more liquidity to lower real interest rates, there is no short-term solution since GDP requires structural reforms in agriculture, manufacturing and services.