As Covid funeral pyres burn, gloom mounts over India’s rural economy

After watching his father’s funeral pyre burn beside a river near their farm last month, Indian sugar cane farmer Dattatray Bagal and his brothers had to put aside their grief to count the financial cost of the death. impact of coronavirus on their family.

They had hoped to buy a tractor for the small farm in Western Maharashtra state, but the brothers spent all their savings on the hospital care of their father and three other surviving family members.

“We can’t think of any major purchases this year,” Bagal said as he irrigated the farm’s fields below the Western Ghats mountains.

“The hospital bill was Rs 820,000 rupees. This not only drained our savings but also forced us to borrow from relatives,” said the farmer, who also caught the virus when he ravaged his family.

“We lost our father and also incurred debt. We will repay the debt in two to three years, but the personal loss can never be compensated.”

Such stories have become commonplace in rural communities across India’s vast hinterland following a devastating second wave of infections that peaked in the past two months.

Lockdowns imposed by authorities trying to contain the surge have added to the pain, but at least the monsoon season, which started this month, should produce normal rainfall.

Some farmers like Yogesh Patil from Sangli district in Maharashtra have been so affected that they have no money to buy seeds and fertilizers to plant summer crops like maize and soybeans.

“I expected to make over Rs 100,000 from a one acre plot of tomatoes. But the prices crashed due to the lockdown and I couldn’t recoup the cost of production,” Patil told Reuters.

Nearly two-thirds of India’s 1.35 billion people live in small towns and villages in the countryside, and the rural economy accounts for about a third of the country’s gross domestic product.

So, however India’s economy rebounds from the pandemic, the agricultural sector is unlikely to be of much help, with rural households indebted, unable to make the necessary purchases to boost their agricultural production or to circulate the money in their communities.

Rural India was largely spared the first wave of infections, which peaked in September, with the agricultural sector growing by 3.6% in the fiscal year that ended in March, even though the latest official estimates showed the wider economy contracted by 7.3%. But the second wave seems to have taken away that resilience.

“This time the feelings in the hinterland are very low and even those who have money are choosing to save rather than spend it or repay loans,” said Ramesh Iyer, managing director of Mahindra Finance. , one of the largest shadow lenders in the rural sector.

Iyer said even with rising farm incomes, fewer people are taking out home, car and personal loans, and nearly one in three borrowers are delaying repayments. This is either because the closures have restricted activity or people’s income has ceased, or because they prefer to save for emergencies.

Mahindra & Mahindra (MAHM.NS), India’s largest tractor maker, sold 22,843 tractors in May, down 12.6% from April for its worst month this year.


The spread of the coronavirus in the countryside has exposed the scarcity of medical infrastructure, and the impact of the outbreak is still being assessed, with little confidence in official figures on infections and deaths, as the screening tests for the disease were woefully inadequate.

India’s vaccination campaign is also way behind the curve, and fears of a potential third wave are hurting people’s confidence in the economic outlook.

“There are serious concerns about demand and rural businesses,” said Rupa Rege Nitsure, chief economist at L&T Financial Management, adding that much depends on how quickly India vaccinates its rural towns and villages.

Ratings agency ICRA continues to expect a prolonged negative impact from the second wave on consumer sentiment and demand, with health and fuel spending eating away at disposable income and less pent-up demand in 2021/22 by compared to last year.

Rising input costs, especially for fuel, have eroded the benefits farmers derive from improved commodity prices over the past six months.

“We hired a tractor to plough, sow and bring fertilizer,” said Gajanan Patil, a farmer from Maharashtra. “While diesel prices hit an all-time high, tillage costs also increased by 30%. Even to harvest and transport to markets, we will have to pay more.

READ | Rise in fuel prices: petrol now costs more than 100 rupees per liter in more than 15 cities. Check details

READ | Explained: How Covid-19 battered India’s economy during the 2nd wave

About Keneth T. Graves

Check Also

Ismail Sabri: Government is focusing on entrepreneurship to boost rural economy

Acting Prime Minister Datuk Seri Ismail Sabri Yaakob speaks in Bera on November 12, 2022. …