Rural consumption grew in April-June, albeit slowly: Motilal Oswal report

Rural consumption grew 6.6 per cent YoY in Q1FY22 as against a growth of 16.4 per cent YoY seen in Q1FY21, according to the EcoScope report of Motilal Oswal Financial Services Limited (MOFSL).

In contrast, urban consumption surged 27 per cent YoY during the last quarter, primarily on a low base of '-18' per cent YoY in Q1FY21.

"In other words, despite the second Covid wave, rural consumption continued to grow in Q1FY22," the report said.

MOFSL re-examined rural and urban consumption trends to analyse the adverse impact of the (national) lockdown during the first wave with that of the (localised) lockdowns during the second wave in six different ways -- Covid cases in rural sector, rural consumption, urban consumption, non-farm sector, farm sector, and government support, the report said.

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It noted that the rural sector claimed a higher share in Covid cases during the second wave.

As per MOFSL's Economic Activity Index (EAI) update for Q1FY22, farm sector GVA grew 6.6 per cent YoY in Q1FY22 (vs growth of 9.2 per cent YoY in Q4FY21, but higher than 5.1 per cent YoY in Q1FY21).

On the other hand, non-farm sector GVA grew more than one-fourth in the last quarter, against a growth of 10.8 per cent YoY in Q4FY21 and a contraction of 16.1 per cent YoY in Q1FY21. This clearly implies that a low base was the primary source of dramatic growth in non-farm sector GVA in Q1FY22.