It is evident from many sources that there is an economic slowdown. But here are some counter facts to perhaps evaluate the situation in a more wholesome way.
1. One of the BIGGEST arguments is that rural India is showing a massive slowdown.
Apr-Nov 2018 vs Apr-Nov 2017: 3.6% growth
Apr-Nov 2019 vs Apr-Nov 2018: 1.7% growth
Bizarrely growth has actually slowed down when wage conditions have seemingly worsened in rural India
2. Rural Consumption appears to be making a recovery
Rural market by volume grew 4.4% in the July-September period from a year earlier when it had declined 2.4%, according to data from Kantar Worldpanel, a global consumer research firm owned by communications and advertising giant WPP.
3. Here is what some senior executives who are on top of the market are saying
HDFC Bank, India’s most valuable lender by market capitalization, sees tentative signs of a revival in rural areas at a time when the wider economy is sputtering.
“The recent loan outreach programs underway in rural areas have given us the sense that the consumption in rural and semi-urban areas is turning more positive,” HDFC Bank Executive Director Kaizad Bharucha said in an interview last week.
TTK Prestige MD: "This year, lack of rural demand has restricted our growth so far to 6 per cent. But, we are seeing some reversal in trend in this regard, and hope to end the year with a 10 per cent growth," he said.
2018-19 vs 2017-18, Q2: 9.2%
2019-20 vs 2018-19, Q2: 12.1%
is this making even sense? What about motorcycles and scooter data? Mostly Rural
When did rural slowdown really begin? Let us look at Hero Motors November to January Sales data
India's largest two-wheeler maker Hero MotoCorp managed to retail over seven lakh units for the second consecutive month in October this year. The company sold 734,667 units last month, witnessing a growth of 16.4 per cent, as opposed to 631,105 units in the same month during the previous fiscal. This is the fourth time in this financial year (2018-19) that Hero's sales have crossed the seven lakh sales mark. It was in September 2018 though that the company recorded its highest-ever monthly sales with 769,138 units sold.
India's largest two-wheeler maker by volumes, Hero MotoCorp registered a sale of 610,252 units in November 2018. The company's sales grew marginally in the post festive period as compared to the 605,270 units sold in November 2017. Hero's growth in volumes comes despite an overall drop in numbers across the auto industry owing to the increase in insurance costs before the festive season and the overall low-key market sentiment.
India's largest two-wheeler maker, Hero MotoCorp registered a drop of 4 per cent in sales for December 2018. The company sold 453,985 units last month, as against 472,731 units in December 2017.
Two-wheeler major Hero MotoCorp on Saturday reported a decline of 9.15% in its sales for January 2019.
According to the company, sales during last month declined to 582,756 units from 641,501 units reported for the corresponding month of last year.
"The weak market sentiment from the previous quarter spilled over to January and continued to dampen sales. The industry has been witnessing lower retail off-take in the past few months due to multiple factors, like the credit crunch and higher two-wheeler insurance costs," the company said in a statement.
So what happened in October- November 2018? This happened
The Mumbai bench of National Company Law Tribunal (NCLT) on Monday found favour with government's arguments to oust the current board of Infrastructure Leasing & Financial Services (IL&FS) and to appoint Kotak Mahindra Bank managing director Uday Kotak as non-executive chairman of the debt-ridden infrastructure development and finance company.
While the economy was not exactly dazzling until October of 2019, it did not fall off the cliff. The NBFC crisis starting in September 2018 and worsening significantly in 2019 hurt many sectors across the economy.
Banks Credit to NBFCs grew by 41.5% by September 2018 (vs previous year), Even by Feb it was 47.5%. My March it had collapsed to 29% Year on Year.
Therefore, the fundamentals of rural economy did not change in 2018 and 2019, it is the access to credit through NBFCs that collapsed. The road to recovery is increased lending in rural India. Which is why the comments by HDFC bank are significant. One hopes things turnaround quickly on that front.