Factors which led to increased rural income/consumption in past few years:
- Good monsoons
- High MSPs
- Increased global trade in agricultural commodities
- Government expenditure in rural infrastructure
- Construction and real estate boom led to non-farm income
- Spending on welfare schemes such as MGNREGA
Why rural consumption is not increasing anymore?
- Stagnant MSPs
- Agriculture exports have deteriorated due to global slowdown.
- Due to fiscal consolidation, public spending has been reduced.
- Sectors like construction and infrastructure are facing a slowdown and will take time to recover
- Government spending on the welfare schemes has become extremely prudent and cautious