Rural consumption in India is on the rise, but there’s a concerning shift toward processed and packaged foods like chips and instant noodles. This trend has health experts worried, as these foods often lack nutrients and contain preservatives. Prof S Mahendra Dev, Chairman of India’s Economic Advisory Council, shares insights on the economy’s current state and its implications.
While urban consumption growth is buoyed by tax reforms and increased income, rural areas are also seeing a surge in spending thanks to a boost in agricultural productivity. This has raised purchasing power, particularly in the fast-moving consumer goods (FMCG) sector.
Current Economic Insights
According to Prof Dev, India’s GDP grew by 8.2% in the second quarter of FY26, with a forecast of approximately 7.3-7.5% for the year. This growth is happening alongside low inflation, creating a balanced economic environment—a so-called “Goldilocks Situation.”
Inflation Control and Government Spending:
The Reserve Bank projects inflation to hover around 2% this year, permitting a cut in the repo rate. Simultaneously, government capital expenditures have risen dramatically, influencing both growth and inflation management.
Global Trade and Its Impact
The rupee has faced depreciation, but Prof Dev assures that this is a cyclical issue rather than a structural problem. While concerns arise over tariffs introduced by the U.S., India is diversifying its export markets, responding flexibly to global pressures. Recent government reforms in taxation and labor are aimed at uplifting the private sector, signaling potential for increased investment.
Health Concerns of Processed Foods
A notable shift in consumption patterns has occurred. Processed foods now represent approximately 21% of total food consumption, especially in rural markets. The convenience and affordability of these products often make them more appealing than fresh, healthy options. However, the health implications of high preservatives and poor nutrition are issues that require immediate attention.
Looking Ahead
The ongoing cooperation between India and Russia is notable, especially in sectors like electronics and agriculture. As India continues to strengthen its relationships worldwide, the aim is to reach a trade volume of $100 billion with Russia by 2030.
Despite global challenges, domestic structural reforms are laying the groundwork for manufacturing-led growth. According to the Boston Consulting Group, India’s manufacturing share could grow significantly by 2047, supported by local production initiatives.
The takeaways? India has a solid economic foundation but must address changing consumption trends, particularly in rural areas, to ensure a healthy future. As the landscape evolves, a balance between growth, health, and sustainability will be crucial.
You can read more about these dynamics in trusted reports from sources like the Boston Consulting Group and recent studies from the Reserve Bank of India.
Source link
ECONOMIC ADVISORY COUNCIL, INDIAN ECONOMY, INDIA GDP, RURAL ECONOMY INDIA, RURAL CONSUMPTION INDIA, RISING PROCESSED FOOD CONSUMPTION IN RURAL INDIA A CAUSE OF CONCERN SAYS CHAIRMAN EAC PM
