It’s far too soon to hail a rural recovery

Why read this story?

Editor's note: It’s been a bad spell of news for the Indian economy. First the slowdown of 2019, one of the worst in decades. And in this year, the COVID-19 pandemic that has taken a hammer to businesses and livelihoods across the world. Over the past month or so, though, some industry leaders have proclaimed that a recent uptick in indicators such as tractor sales as a sign of imagined growth in the agricultural sector, a harbinger of better times for rural India—“Bharat”—and all of the country. However, the economic linkages of adjacent and allied sectors are more complex, and we really can’t make predictions of any sort of recovery based on simple facts right now. It’s worth going into in a little more depth to understand just why. What’s in a tractor? First off, tractor sales are correlated with agricultural output, but do not imply agricultural recovery. Pawan Goenka, managing director of tractor and SUV maker Mahindra & Mahindra Ltd, has pointed out that tractor sales in June 2020 were better than in the same month a year earlier. He emphasized …