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See positive sentiment prevailing in agri-related markets, says Blue Star

economy | IST

See positive sentiment prevailing in agri-related markets, says Blue Star

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The government is focusing on the farm sector with Rs 6,000 per year direct support to farmers announced in the budget this year along with a host of other schemes. B Thiagarajan, joint MD of Blue Star, Siraj Hussain, former agricultural secretary and Arvind Singhal, chairman of Technopak Advisors, discussed how rural consumption is panning out.

The government is focusing on the farm sector with Rs 6,000 per year direct support to farmers announced in the budget this year along with a host of other schemes. B Thiagarajan, joint MD of Blue Star, Siraj Hussain, former agricultural secretary and Arvind Singhal, chairman of Technopak Advisors, discussed how rural consumption is panning out.
In terms of the improvement seen in rural demand, Thiagarajan said, “We do see but not because Rs 6,000 is going to make a difference but because there is a positive sentiment. 65 percent of our sales come from tier III, tier IV and tier V towns. Not only for air conditioners but also in commercial refrigeration equipment like ripening chambers, cold chain, we see positive sentiments prevailing in quite a few markets which are agri-centred markets.”
“Right now the demand growth is very high – I am talking about February last week and March – Tamil Nadu is doing well, Telangana, Andhra Pradesh, interior Maharastra. As I mentioned again, it is about sentiment in case of consumer durables that the things are going to look better that makes people spend,” Thiagarajan added.
“I think the challenge in India is a very peculiar one. For farmers, the more they produce, the more the distress increases. Indian farming is that particular situation where we need to produce a bit less if the farmers have to get better prices otherwise the farm gate prices have been very depressed for the last two-three years. The waivers, in any case, do not add to the purchasing power because the money was already used by them in the previous years so it is only a balance sheet entry that they don’t have to pay back those loans. The Pradhan Mantri Kisan Yojna scheme in the interim budget is likely to add no more than Rs 20,000 crore in the hands of the farmers and in the next financial year about some Rs 75,000 crore. Most of that money will certainly add some fillip to the consumption but so far at least we don’t see any indication on the ground that as far as the rural spending per se is concerned, that is seeing any kind of an uptick. There is a lot of investment in the food processing area. Therefore that segment is seeing growth for sure but the consumer consumption cycle – we don’t see any significant improvement there as far as rural India is concerned,” Singhal said.
Talking about the loan waiver and the direct support to the farmers, Hussain said, “I think the money is reaching the rural consumers but let us be very clear that right now when the first instalment of PM Kisan has been disbursed, there are no agricultural operations urgently in the immediate future. So in all likelihood, I think this money will be spent on things other than agriculture. Except for harvesting of wheat and chana and mustard, there is no other agricultural operation nearby. Therefore, I would imagine that the money which has been credited to farmers’ accounts - about Rs 2,000 crore in Uttar Pradesh (UP) alone – will be used by small and marginal farmers for things like buying shoes or toothpaste, soap etc. so personally speaking this money will not go in for agriculture, it will be used for consumer expenditure or some other urgent requirements.”
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