Has the pandemic helped revive the rural economy?

The pandemic may in fact have led to reverse migration, although the jury is still out on whether there is a positive impact on rural demand and growth.

The number of very small business loans has increased by 100% since the pandemic (fiscal years 19-21), while personal loans have increased by 30%, according to data from credit bureau CRIF High Mark. That added to optimism in rural business confidence, an index he calculated shows.

In the three-year period between FY2019 and FY21, spanning a significant period during the pandemic, rural India is witnessing 30% growth in the number of retail loans disbursed, the value of loans increasing by 23%. The average size of business loans ended up decreasing, although the number of business loans increased by 100% and the value of loans decreased by 30% over the period.

Overall rural loan disbursements, which include both bank and NBFC loans, increased by 16% in value and 32% in volume, according to data from CRIF Highmark. The latest RBI monetary policy report also indicates a recovery in rural demand after an initial setback after the second wave spread to rural areas.

The first Rural Business Confidence Index from the Credit Bureau in partnership with the Confederation of Indian Industry (CII) showed a score of 63.9 in October and the industry is optimistic and optimistic about the sentiment of the economy rural.

The Rural Business Confidence Index (RBCI) survey was conducted in September and October 2021 when the impact of the second wave of covid largely subsided, restrictions were lifted and the campaign to vaccination has accelerated since June 21. With the reduction in new cases and severity, business activity was improving.

The RBI and the government have also announced support measures to help businesses cope with the impact of the pandemic. This may have impacted the optimism and business sentiments of businesses and MSMEs that took part in the survey, the credit bureau said.

But microfinance loans contracted in value (from Rs. 1.23 Lakh cr in FY 2018-19 to Rs. 1.12 Lakh cr in FY 2020-21) and by 19% in volume (from 396 lakhs in FY 2018-19 to 320 lakhs in FY 2020-21) over the same period.

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