Roughly five months after India’s first lockdown to tackle the Covid-19 scourge, it’s easy to blame the pandemic for the current economic woes. Sure, GDP contraction isn’t something we would have to reckon with if it wasn’t for the virus, but an economic slowdown was very much underway. In the second quarter of fiscal 2020 (July to September 2019), growth was down to a six-year low of 4.5 percent (subsequently revised at the end of the year to 4.2 percent); the following quarter was marginally better at 4.7 percent growth, although the pandemic-induced revision brought it down to 4.1 percent; the fourth quarter growth—which included just seven days of the lockdown—was pegged at 3.1 percent and the full year’s at 4.2 percent.
The pre-Covid-era, however, is water under the bridge. The new normal may by now be a well-worn buzzword but for industries that have been busy restoring supply chains and stoking fresh demand, it’s quite literally a start from scratch. And it’s been an encouraging beginning.
If there are glimmers of hope, they’re largely being seen in agrarian India. Even pre-Covid, it was agriculture
, and not manufacturing and construction, that helped take fiscal 2020 GDP past 4 percent. Since then, strong monsoons and record sowing levels are manifesting in an increase in rural spending, which has also been buoyed up by the government pumping cash into villages via a series of schemes.
That windfall has started reflecting in report cards of consumer companies, from tractor makers and two-wheeler makers to biscuit marketers. Even India’s largest carmaker Maruti, which typically derives 80 percent of its demand from urban India, is seeing higher growth from rural
Our cover story is on a company that may well be a barometer of the rural ray of economic hope, Hero MotoCorp. Consider: In the April-June quarter, rural sales have outpaced urban by 12 percent for Hero that would get half of its overall sales from rural pre-Covid. July sales, of almost 5.15 lakh units of motorcycles and scooters, were almost at levels of a year ago. Sensing the opportunity, the world’s largest two-wheeler maker is going the whole hog with its rural outreach efforts, which include 650 rural sales executives (RSEs) covering 55,000 villages. The RSEs are in touch with the rural community through video and phone calls, with information on everything from Covid safety measures to product information and retail finance. As Hero MotoCorp chairman & managing director, and CEO, Pawan Munjal tells Rajiv Singh, who penned the cover story: “We have to learn to live with the virus. You can’t sit at home and wait for it to go away.”
Yet, whether the July rebound will persist is a billion-dollar question—at a time when Covid-19 in India is spreading further upcountry. Clearly, a rural recovery can do its bit for the Indian economy, but as the analysts at Barclays succinctly put it in a recent research report: “Ultimately, health care management and disease resolution will dictate the pace of the economy’s return to normal.”
India completed 73 years of Independence in a period in which individual freedom didn’t have a lot going for it. When locking down and masking up were the calls of the day, the pandemic shone a light on how shackled so many of the nation’s citizens still are in accessing quality health care and education—and, indeed, a livelihood to make ends meet. Our Independence Day package
, put together by Jasodhara Banerjee, delves into ‘Finding Freedom’ from disease, illiteracy and unemployment. Covid-19 is a cruel reminder that you can’t take anything for granted.
Editor, Forbes India
(This story appears in the 28 August, 2020 issue of Forbes India. To visit our Archives, click here.)