InvestorQ : What negative effect you see from falling rural demand for Indian companies?
Khushi Patel made post

What negative effect you see from falling rural demand for Indian companies?

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Dhwani Mehta answered.
4 weeks ago
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Falling rural demand could hit a number of sectors. For example, FMCG gets 50% of revenues from rural areas and weak rural demand could be an overhang. Even sectors like NBFCs, rural banks, SFBs and microfinance institutions could get hit. Of course, expect an impact on two-wheelers, tractors and agrochemicals and seeds too. So it will be huge.

But more than sectors, the impact will be macro in nature. Last 2 years, it is agriculture that drove GDP with stable 3.5% to 4% consistent growth. The so-called GDP recovery will be impacted. More importantly, it will hit export performance as MSMEs account for 45% of Indian exports and rural stress will hit supply chains quite deeply. FMCG and product demand is one side, the macro impact could be much larger.

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