about 1 month ago
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While we continue to look, almost with a “blinkers-on” outlook at the stock market and India Inc, its probably essential to look skywards too.

What do you see? The dark clouds of rains are there but not thick enough, holding the promise of intermittent rains. In cities, we might be feeling that the floods have come and gone; ensconced in the comfort of home, these intermittent showers are a pretext to have more chai, something fried and listen to “rain songs.” But the truth is that if we do not get more rains, and lot more, our lakes which are not yet full, could pose a problem through the rest of the year. It is only when our taps run dry that we worry about monsoon.

As per the IMD, out of the four months of monsoon, two have been bountiful, labelling it as ‘normal.’ But underneath, the reality is that the progress of the kharif or the winter crop is still short of normal. Coming 2-3 weeks are extremely crucial as the sowing should get completed before the end of this month and for that, rains need to be normal and not merely headline statistics ‘normal.’

The monsoon season began with abundance, then a dry patch and it is now that we are seeing some revival. On the kharif sowing, as of July 30, 79.04% of the area normally sown during the kharif season was covered. While this is progress from the 46.6% area covered until July 9, it is still less than the 83.45% area covered by this time last year. The sowing has picked up over the last fortnight and as monsoon picks pace, hope is that it will surpass that of last year. As of now at least we are hopeful that we will reap a bountiful Q3 this fiscal.

Madan Sabnavis, chief economist at CARE Ratings said in a note issued on July 28, “These numbers (sowing) are important because we are banking a lot on kharif crop to provide support to GDP as well as income for spending during the festival season as part of the rural demand”.

Does this mean more spend on FMCG products? A survey done some time ago showed that a rural household spends Rs 504 a month on FMCG products, roughly 18% of the total monthly budget of Rs 2,800. Of this, food products contribute a major chunk at 55% or Rs.280. Skincare and cosmetics are still a luxury with a monthly average spend of Rs.36.

And what did come as an eye-opener was that more than half of India’s stock of consumer durables and two-wheelers are now in rural India. Bikes, trucks, tractors and cars will see a spike up in demand. Also, rural India accounts for more than 40% consumption in major FMCG categories such as personal care, fabric care and hot beverages.

Every company, in the FMCG, auto, consumer durables, are all targeting aggressive marketing drive in rural India. And a rich harvest will surely mean richer harvest for these companies. And this in turn means good fortune for those in the stock markets too. Q2 is expected to be good but Q3 is expected to be excellent for these agri companies and FMCGs.

So, once in a while lets look up from our screens at the sky and pray for a bountiful harvest.

From "tip, tip barsa paani" we need, " barkha rani jara jamke barso!"

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