Rural incomes

months in the January-march quarter. The company attributed the fall to “moderating rural demand”.

The country’s factory output, as measured by the Index of Industrial Production (IIP), contracted or registered negative growth in March for the first time in 21 months, shrinking 0.1%, an obvious sign of slowing demand in the economy. Within IIP, manufacturing output shrunk 0.4% in March, mining and electricity saw weak growth at 0.8% and 2.2%, according to the Central Statistics Office data.

“I think we certainly need some sort of a stimulus now,” Bhanumurthy said, adding that it also needs to be seen if a spate of farm loan waivers has adversely affected rural lending, which is vital for the informal sector. Economist Abhijit Sen said rural lending may not have gone down, but that it hasn’t increased to the levels it should have.

Acknowledging a slowdown, the finance ministry, in its “Monthly Economic Report” for March, identified a drop in private consumption and muted exports as reasons. “On the supply side, the challenge is to reverse the slowdown in growth of the agriculture sector and sustain the growth in industry,” the report said.