NEW DELHI • India's economy, left cratered by the coronavirus pandemic, is drawing energy from one of its invisible and often neglected engines: farmers.
Business leaders, policymakers and politicians alike are pinning hopes on the rural sector as bountiful rains have set the stage for another year of record crops. Higher disposable incomes with farmers are expected to boost demand for products ranging from cars to cement to gold jewellery.
That contrasts with the urban areas, where companies are still struggling to boost their sales amid the pandemic which has hit business activities, hurt demand and caused labour shortage. The adverse impact of the world's strictest lockdown in March continues to haunt, but the hinterland is holding out hope.
Maruti Suzuki India and the local unit of South Korea's Hyundai Motor, the two main players in India's car market, said October sales were the best ever for any month. Hero MotoCorp, the world's largest maker of motorcycles and scooters, as well as smaller rival Bajaj Auto, reported record sales, as rural markets provided a cushion against a downturn in cities.
"We have seen a stronger demand from rural areas across categories for our products as compared with last year," Mr Srinivasu Allaphan, director of sales and marketing at JK Tyre & Industries, said in an e-mail response.
"We expect it to sustain for the next three quarters. Higher sales in rural markets will compensate for the losses in urban and semiurban towns."
Rural incomes have stayed strong as production of monsoonsown food grains is estimated to hit record 144.5 million tonnes. The government's move to raise support prices for some crops and boost spending on rural employment programmes have also supported incomes of farmers and labourers.
"Despite Covid-19 and the related lockdown, the agricultural activities across the country have almost remained unaffected. This has raised the hope that rural demand could drive the economic recovery," according to India Ratings and Research, a unit of Fitch Ratings.
Even construction activities gathered pace.
JSW Steel's retail sales volume more than doubled from a quarter earlier in the July-September period, the company said, while Mr Ajoy Chawla, chief executive officer of the jewellery division of Titan Co, said demand in tier 2 and 3 markets was fuelled by weddings that were postponed earlier.
But top company officials and analysts remain cautious.
While demand is "good", and is likely to remain so for the rest of the year because of a good monsoon, it's difficult to predict sales beyond that, Mr R.C. Bhargava, chairman of carmaker Maruti, told reporters.
A rush to own private vehicles as people move away from mass transport will be over by January, he said.
"I would not really bet on the mass consumer coming back in a hurry because so far I am not seeing any evidence of it," Mr Rajiv Bajaj, managing director at Bajaj Auto, told CNBC TV-18.
"I'm extremely concerned, I'm very anxious."