The document summarizes key economic developments in India from September to October 2012. It discusses the government's announcement of important policy reforms to boost investor sentiment, including opening the pension and insurance sectors to FDI, reducing withholding tax, and liberalizing FDI in various industries. It notes that these reforms have led to increased foreign institutional investor inflows and an appreciation of the rupee against the dollar. The document also analyzes why India is ready for a retail revolution due to rising incomes, favorable demographics, and growth in retail loans.

1. September- O ctober 2012

2. ECONOMY W ATCH
HIGHLIGHTS
 Government announces key reform measures: Update on unfinished agenda (page 2-6)
 Government’s action on some long pending policy reforms last month uplifts investors’ sentiment
(page 5)
 Latest round of FICCI’s EOS reveals a modest improvement in economic outlook. The
consensus GDP forecast for FY13 and FY14 are 5.7% and 6.5% respectively. Additionally, even
though an overwhelming majority (69%) of the respondents believe that the economy is facing
recession, there is also a growing feeling that the current phase of de-growth may be bottoming
rd
out. Nearly 2/3 of the respondents believe that a recovery in global growth is possible in the
medium term (pages 6-8)
 The consensus fiscal deficit forecast for FY13 is at 5.6% of GDP. However, more importantly, the
consensus fiscal deficit estimate in the next fiscal is 5.3%, indicating that the process of fiscal
consolidation will be long and arduous and it may be difficult to plough it back to the levels
witnessed prior to the crisis (pages 6-8)
 Inflation forecast for FY13 veers towards a consensus of 7.4%, whereas for FY14, it is projected
at 6.4%. The survey respondents affirm that the RBI’s “fixation” of prioritizing the domestic
inflation correction over growth correction may not be justified in the current scenario. The other
good news is that 63% of total respondents believe that domestic interest rates will eventually
decline in the medium-term (pages 6-8)
Dr. Soumya Kanti Ghosh
soumya.ghosh@ficci.com
(with inputs from Nibedita & Sakshi)
FICCI Economics and Research Division
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3. ECONOMY W ATCH
THE INDIAN ECONOMY - MACROVIEW
THEME WATCH – REFORMS 2.0 UNVEILED
The month of September was eventful. The Investors have taken these reforms in a positive
Government of India finally decided to take the stride and there has been a discernible increase
rd
plunge by announcing some key policy in FII inflows as well. The FII inflows between 3
measures. The government’s call of action on and 13th September 2012 amounted to $250
some long standing policy issues came in at a million. Post these announcements, in the
very apt time and has helped clear the air of a second half of September, the FII inflows
slowdown in decision making machinery of the amounted to $3347.04 mn. Further, till October
country. 25, 2012, the inflows have already amounted to
$3180.85 million.
Exposition 1: key policy announcements:
(Sep14-oct4’2012) Exposition 2: FII inflows and exchange rate
movements (in $ mn)
October 4, ‘12 1000 58
800
Cabinet approval to open pension 56
and insurance sectors to foreign 600
investments, Amendments in 400
54
Companies bill
September 21, ‘12 200 52
0
Withholding tax cut to 5%, Rajiv 19/04/2012
50
26/04/2012
25/05/2012
29/06/2012
16/07/2012
13/08/2012
22/08/2012
20/09/2012
27/09/2012
19/10/2012
18/05/2012
15/06/2012
22/06/2012
23/07/2012
30/07/2012
29/08/2012
12/10/2012
4/5/2012
1/6/2012
8/6/2012
9/7/2012
6/8/2012
3/4/2012
5/9/2012
12/9/2012
12/4/2012
11/5/2012
5/10/2012
Gandhi Equity Scheme announced -200
48
-400
September 15, ‘12
-600 46
FII (USD mill) Rs/USD
FM proposes setting up of National
Investment Board to fast track Source: RBI and SEBI
clearances to mega proposals
FOCUS: INDIA READY FOR RETAIL
September 14, ‘12 REVOLUTION
FDI liberalised in civil aviation, multi
brand retail, power exchanges and India has witnessed a sea change in its
broadcasting services, fast track economic and social profile since first set of
disinvestment, and decontrol diesel reforms in 1991 and the time is now appropriate
price
to usher in the benefits of a retail revolution.
There has been a conspicuous surge in the
disposable incomes of the consumers leading to
an obvious increase in discretionary spending,
Post these announcements there has been a
and this is only likely to grow going ahead.
return in buoyancy in the market and improved
investor sentiment. Sensex touched a 15 month
The demographic profile of the country is
high on October 4, 2012 to cross the 19,000
extremely favorable with 34% of the population
mark. Further, in less than a month (between
expected to be between the age group 5-24
September 14 and October 9, 2012) rupee
years even in the year 2025. There has also
appreciated by almost 4%. It stood at Rs
been an incredible growth in retail loans.
52.375/$ on October 9, 2012, and was at a
similar level in May this year.
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4. ECONOMY W ATCH
Considering the above facts, it is not difficult to different clientele and provide very different kind
estimate the sheer size of the retail space in of services.
India and the kind of opportunities it can provide.
Various estimates put the size of the retail For instance, the retailer belonging to the
industry to be between $400-450 billion. unorganized sector provides customized
Organized retail has been growing at an services such as understanding the likes and
impressive rate of 35% to 40% y-o-y in the last dislikes of individual customers, recommending
few years compared to 9-10% growth in the new products, adjusting prices for different
overall retail industry. In fact, Indian market customers and in turn gaining their long-term
remains a lucrative one for global retailers as it patronage and goodwill. This is an integral part
ranks 5th in the A T Kearney’s Global Retail of an Indian consumer’s routine life and is
Development Index (2012) which ranks the top unlikely to change overnight. Alternatively, even
30 developing countries for retail expansion though organized retail may have its own
worldwide. advantages, it cannot provide such services
(Kohli & Bhagwati, 2011).
Further, the country’s urban population has
increased by nearly 90 mn between the years Moreover, several studies have shown that the
2001 and 2011 and is expected to increase by advent of these ‘big’ retailers will benefit the
250 mn (as per independent forecasts between consumers and manufacturers. There will be a
2008 & 2030). Besides rapid urbanization, it is multiplier effect in terms of employment
also vital to mention here that the expanding generation. Consumers will have a wider choice
rural and semi rural markets also provide and get better deals besides assurance of an
potential opportunities for the retail industry improved quality.
(independent estimates suggest rural and semi
rural areas to dominate the retail industry and Another major contentious issue that has been
account for 50% of the market share by 2012) in the limelight and needs to be discussed is the
The likely scenario therefore is that of a growing impact on farmers. This is especially important
urban-based retailing supporting the rural because a major chunk of retail industry is
economy by investing in rural food-processing constituted by food and has a direct bearing on
facilities, warehouses, and transportation and the farmers (in India food constitutes 70% of
shipment hubs (Kohli & Bhagwati, 2011). total retail). At present, even though India is the
world’s second largest producer of fruits and
However, one the key attributes of the Indian vegetables, about a one third of it is lost due to
retail industry has been the dominance of the inadequate storage facilities.
unorganized or the self organized sector. The
unorganized sector accounts for a whopping Additionally, with greater investments coming in
95% of the retail industry and thus leaving the (in China, for example, FDI was close to 4% of
organized retail with a share of only 5%. cumulative FDI inflow, since the sector was
opened up), we will see infusion of new
And for this reason lot of concerns have been technology across the agriculture value chain as
expressed about the unorganized sector losing well improvement in the back end infrastructure
its space and succumbing to the tough and a reduction in wastages. Not only the
competition. It is extremely crucial to dispel this farmers will get much better prices for their
myth. The first and the foremost thing, as of now produce but also access to better quality inputs
the organized and unorganized enjoy different like seeds.
relative advantages. They cater to a very
India is already far behind a lot of countries as
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5. ECONOMY W ATCH
far as organized retailing is concerned. The in the country remains low. Though the life
share of organized retail in US is 80%, Thailand insurance segment penetration has increased
is 40%, Brazil is 36% and China is 20%. India from 1.72% in 2000 to 4.40% in 2010, the non-
cannot close the door to this opportunity. We life insurance market penetration has been
need to expand our horizons and be ready for between 0.55-0.70% in 2000 and 2010.
this retail revolution standing at our doorsteps!
Table 2: Premiums as a % of GDP 2011
Table1: FDI Caps raised Total Life Non-Life
Sector E xi s t i n Revise Benefits Business Business Business
g Cap d Cap North 7.9 3.5 4.4
Multi brand 51% 1.Stronger Am e r i c a
Retail Backend
Latin 2.8 1.2 1.6
Infrastructure
Am e r i c a
and
2.Technology
Infusion in Agri Caribbean
value chain Europe 7.1 4.1 3.0
As i a 5.8 4.3 1.6
3. Employment India 4.1 3.4 0.7
Generation PR China 3.0 1.8 1.2
Af r i c a 3.6 2.5 1.2
P o we r 26% 49% 1. Capital World 6.6 3.8 2.8
E xc h a n g e s Investments Source: W orld Insurance i n 2 0 1 1 , S wi s s R e
2.Infusion of
Technology Increasing the FDI cap in the insurance sector
Civil 49% 1.New JVs will also result in channelization of funds from
Aviation
2.Better
the sector into infrastructure. It may be noted
customer that FDI in Indian insurance sector stood at $1.4
services bn of which life insurance comprised $1.1 bn
3 . L o we r T a r i f f s and general insurance comprised $0.2 bn of
Broadcasti 49% 74% 1.New FDI.
ng Technology
Services
2.Better Table 3: Investments of Life and Non Life
Content Insurers in Infrastructure (Rs crore)
Management Life* Non
Pension 26% 1.Support Life
Infrastructure 2010 2011 2010 2011
Development Infrastructure 85675 8918 1037 12216
Insurance 26% 49% 1.Support (9.8)* 1 3 (14.8)
Infrastructure * (8.7) (15.6)
Development *includes housing
** share in total investments
2.Better Source: Annual Report, IRDA
insurance
coverage FOCUS: RAISING THE CAP IN PENSION
Source: FICCI Research SECTOR
The government has also given a green signal
to foreign investment in pension funds which
FOCUS: INSURANCE SECTOR REMAIN
could increase up to 49% from the present 26%
UNTAPPED
in line with that of the insurance sector. This
The insurance sector still remains largely step is likely to bring in more foreign players or
untapped in India. The insurance and banking pension fund managers for the New Pension
services contribution to the country’s GDP is System (NPS) as currently the foreign
about 7%. companies are not allowed to invest in India’s
pension sector.
However, despite this, the insurance penetration
2

6. ECONOMY W ATCH
Background the individual of the safety of his account and
prevent any kind of fraud. Another key feature is
India has one of the fastest growing populations the high ease with which this account can be
in the world. This on one hand symbolizes an accessed from either post office or bank
increase in the young population, and on the branches across India along with account
other hand also implies an increase in the old portability. The presence of 64,000 bank
population. The number of people aged 60 and branches and 153,000 post offices would
above is expected to increase to 113 million by facilitate in developing such a system.
the year 2016 which will eventually touch almost
180 million by 2026. However, India does not To begin with, six professional Pension Fund
have a sound pension scheme which would take Managers (PFMs) were selected to
care of the elderly people post their retirement professionally manage the retirement funds
as this would essentially require a huge which would be formed by individual
expenditure on the part of the government. contribution. The pension providers would then
convert the lump sum asset accumulated into
As per the Old Age Social & Income Security regular monthly pension.
Report (OASIS, 2000), the government
employees receive a ‘non-contributory, indexed, The NPS was implemented in 2004 for all
defined benefit pension funded entirely by the government employees and later extended to
State.’ This has already created a strain on the the private sector in 2009. However, the
government revenues as the number of central subscription to the scheme was much lower
government pensioners have run into more than than expected. In this backdrop, a committee
4 million since late 1990s. This apart, only the was set up under the chairmanship of Mr. G. N
organized sector could be brought under the Bajpai in August 2010 (commonly known as the
anvil of schemes like Employees’ Provident Bajpai Committee Report) to review the
Fund (EPF) and Employee’s Pension Scheme implementation of the NPS in the informal
(EPS) with little or no provision left for the sector. The committee recorded that there were
unorganized sector. only 50,000 private sector subscribers and the
reason for such a low number was due to the
Keeping this in mind, Project OASIS was low distribution incentive to the PFMs to
formulated with the twin focus of improving the distribute their schemes to the general public.
existing pension schemes and formulates a new Hence, it suggested a couple of changes in the
pension scheme for all those excluded workers NPS which are given below.
from over 300 informal sectors who have the
potential of saving small amounts to be utilized  No limitation in the number of PFMs
 No bidding process as any player
at a later point of time. interested in becoming a PFM can now
do so by fulfilling certain eligibility criteria
New Pension Syst em ( NPS) laid down by the PFRDA
 No uniform fee structure as the PFMs
Thus, the NPS came into existence where an would have the complete freedom to
individual would create an account and keep prescribe their own fee provided it has
track of the balance which would reflect his an overall ceiling
assets at that point of time. The individual would  Increasing access, including post offices
be contributing to this account in his entire among the new points of presence
working life and obtain benefits post his
retirement. The system essentially requires a
sound regulatory framework which would ensure
3

7. ECONOMY W ATCH
W hat w ould t he opening up of FDI perspective of the situation. This move was long
mean? overdue in wake of 1) our rising subsidies and
The market for the pension sector has not been increasing fiscal deficit 2) increasing import bill.
fully tapped as there is a general lack of
awareness among the public. With more foreign Estimates indicate that the under recoveries of
fund managers entering the sector would OMCs have surged by about 22% in the second
essentially mean there would be creation of quarter of 2012 owing to the increase in oil
awareness as more fund managers would be prices. The total under recoveries of the three
pushing hard the product among the general OMCs (IOCL, BPCL and HPCL) amounted to Rs
public. Also, a link between the buyer and the 1283 bn as on March 31, 2012 and has
seller will be established. As per data from increased to Rs 1576 bn by June 30, 2012.
public domain, at present, six pension fund
managers manage more than Rs 20,000 crores. It may be noted that India’s rising deficit (trade
The possibility of opening up of the sector and current account) is largely due to rising
comes at a time when a large number of life imports of oil products. Import of these
insurers are suffering from expense overrun and commodities should therefore be managed
are in need of fresh capital infusions through immediate policy action. The average oil
import bill (in $) has increased by 22% in the last
Currently, pension funds in India are managed 5 years, with the oil import bill rising by 32% in
by IDFC, SBI, Kotak Mahindra, Reliance Capital FY12.
and Life Insurance Corporation. They constitute
FOCUS: SETTING UP NATIONAL
less than 7% of GDP as compared to 100% in INVESTMENT BOARD
the US. A look at the OECD countries reveals
that they account for more than 90% of the The government’s proposal to set up a National
world’s private pension assets while that of the Investment Board (NIB) to fast track projects
BRIC countries are relatively low (refer to the (especially infrastructure) facing inordinate
table below). delays is a very positive move. This would
certainly help bring some optimism among
Table 4: Countries with Private Pension investors, as delays in clearances continue to be
Funds as a % of GDP one of the major road blocks.
S wi t z e r l a n d 152
Netherlands 149
The Board would also be authorized to take final
OECD (top 5)
decision on proposals and projects which are
Countries
Iceland 147
above a certain threshold limit. Once the project
Denmark 140 has been approved by the NIB, no other ministry
USA 124 or department would be authorised to interfere
with the decision.
Brazil 17
Russia 2 Table 5: Projects with cost overrun with
Countries
respect to latest schedule (June 2012)
India 5
Sector No Latest Anticipated Increase
BRIC
China 1 Approved Cost
Atomic 2 16,663 22,947 37.7
Source: OECD Energy
Civil 1 1942.5 2325 19.7
FO CUS: INCREASING DIESEL PRICES Aviation
Coal 11 10,671.7 13,325.8 24.9
Though there have been concerns about the Petroleum 2 30,533 31,324 2.6
increase in diesel prices fuelling inflationary
pressures but we really need to take a long term Power 12 34,242.5 44,235.0 29.2
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8. ECONOMY W ATCH
Railways 76 37,791.7 90,667.6 139.9 23% said that the global economic situation is a
Road 11 3,324.3 5,445.2 63.8 concern, while 29% indicated slowdown in
Transport
economic reforms to be an issue.
&
Highways
Shipping 7 4306.6 4770 10.8 The participants expressed concern about
& Ports inflation and ballooning fiscal deficit. It was
Source: MOSPI pointed that the soaring subsidy bill is a major
concern and needs to be tackled on priority
Table 6: Projects with time overrun with basis.
respect to latest schedule (June 2012)
Sector No Latest Anticipa Range The companies also expressed concern about
Approved ted Cost (Months)
cost of financing for the manufacturing sector. It
Atomic 5 41548.3 47832.3 3-51
Energy has become imperative to improve the efficiency
Civil 2 2278.1 2660.6 3-17 of the manufacturing sector and give a much
Aviation needed boost.
Coal 25 16024.5 19561.9 12-16
Petroleum 32 93948.9 100615. 1-80 As per the respondents, the manufacturing
1
sector has been the missing link in India’s
Power 42 119593.5 129987. 2-99
2 growth story and the country has the potential of
Railways 40 17565.2 57121.8 0-216 becoming a major manufacturing hub.
Road 83 33257.5 35335.8 2-101
Transport &
FOCUS: UNFINISHED REFORMS:
Highways CONTINUING THE MOMENTUM
Shipping & 7 9429.2 10670.2 9-29
Ports Notwithstanding the recent announcements, the
Source: MOSPI Government needs to carry forward the reforms
agenda. Table 6 summarises the unfinished
reforms agenda as per different sectors.
FOCUS: QUICK FICCI SURVEY ON T a b l e 7 : U n f i n i s h e d R e f o r m Ag e n d a
REFORMS Sector Reforms
FICCI did a quick survey, post announcement of
Agriculture APMC Reforms
these reforms on September 14, 2012 .The
survey results revealed that the reform PDS Reforms
measures undertaken by the government have
certainly helped improve the outlook of Manufacturing 1. Increase rate of depreciation for
general machinery from 15% to 25%
members of India Inc. A majority 72% of the
participants indicated that the announced reform 2. Standard rate of excise duty could
measures would help revive buoyancy in be progressively reduced to 8% as
investor sentiment. suggested by recent Kelkar Report to
align it with proposed rate of 8% for
central GST
In fact, about 68% of the respondents said that
they expect the economic prospects to be
‘Some what Better’ over the next two quarters Infrastructure 3. Opening ECB Window for NBFCS
while 32% of the participants expected no that are involved in infrastructure and
asset financing
change in the economic situation.
4. Development of Municipal Bonds
About 46% of the companies said that domestic
challenges like inflation and fiscal deficit were Finance 5. Introduce Microfinance Bill
the biggest threat to growth in near term. About
5

9. ECONOMY W ATCH
the economy is facing recession, there is also a
Housing/Real 6. Grant industry status to Real Estate growing feeling that the current phase of de-
Estate sector
growth may be bottoming out.
Higher Education 7. Allowing all types of institutions to
Exposition 3: Current economic scenario
be established as Section 25
companies and permission to convert Strong and
growing
the existing trusts and societies to 6%
Section 25 companies. Currently, Strong with
government is allowing only technical uncertain
institutions to be set up through growth
25%
Section 25 Companies
Facing
Health care 8. According infrastructure status to recession
the sector 69%
9. Free/concessional land and use of
public healthcare facilities for private
medical colleges in focus states Source: FICCI’s Economic Outlook Survey, Q4 FY13
10. Private sector participation to be
encouraged in promotive, preventive
and primary care with appropriate tax As far as global growth is concerned, the
incentives to primary health care somber mood of the global economy still
chains operating beyond Tier 2 towns continues in wake of the impending US
11. PPP model for private sector elections, of the wait for the revival of the
participation in screening and Japan’s economy and China’s sliding GDP
detection programs of the government
figures. However, on the positive side, nearly
rd
2/3 of the respondents believe that a recovery
in global growth is possible in the medium term.
Oil & Gas 12. Infrastructure Status- Non-
inclusion of Oil & Gas Exploration &
Production, from the definition of As widely expected there is no discounting of
infrastructure would adversely affect the role of monetary policy for an economic
the industry’s ability to access funds, revival, of fiscal prudence, and of the spate of
concessions and other benefits, recent economic reforms to continue at the
granted to the infrastructure sector
and inhibit its accelerated growth
present momentum in achieving the objective of
higher growth rates.
Others 13.Acceptance and Implementation of Economic O utlook : FY 13- 14
the Report of the Expert Committee
on GAAR
A simple analysis of the survey results shows
14. The way forward on the Direct that 57% of the respondents felt that the
Taxes Code and Goods and Services economy would grow between 5.6%-6% in
Tax FY13. There were no respondents who believed
15. Land Bill
that the economy would log in a growth rate
higher than 6% in this fiscal.
FOCUS: FICCI ECONOMIC OUTLOOK For FY14, most of the views subscribe to a
SURVEY
growth rate not exceeding 6.5%. Though there is
The latest FICCI Economic Outlook Survey mild negative skewness in the responses, but
indicates clear signs of continued slowdown largely the picture is that of cautious optimism
However, even though an overwhelming across FY13-FY14.
majority (69%) of the respondents believe that
6

10. ECONOMY W ATCH
Table 8: Consensus economic outlook: FY13-14 improvement in global output over medium term.
GDP GDP Fiscal Fiscal
growth growth Deficit(% Deficit(% Growth Growth WPI WPI
More importantly, 64% feel domestic inflation will
Measure rate rate GDP) GDP) in IIP(%) in IIP(%) Inflation Inflation subside and 73% say employment will increase
forecast forecast forecast forecast forecast forecast rate(%) rate(%)
FY13 FY14 FY13 FY14 FY13 FY14 FY 13 FY 14 over the next three years. The following table
Weighted details the net responses.
average 5.7 6.5 5.6 5.3 2.5 4.4 7.4 6.4
Exposition 4: Current economic scenario
Range 5 - 6 5.5 - 7.5 5.4 - 5.9 4.8 -6.5 1.4 - 3 4-5.6 6.5 - 8 5.5 - 7.5
100.0
Source: FICCI’s Economic Outlook Survey, Q4 FY13
80.0
60.0
With the recent spate of economic reforms and
40.0
expectations of fiscal prudence, the WPI
20.0
inflation figures are expected to ease from an
0.0
average of 7.4% in FY13 to 6.4% on average for
Employment
Global Output
Trade Deficit
Interest Rate
Budget Deficit
Inflation
FY14.
Interestingly, the slippage in fiscal in current Strongly Decreasing Decreasing Increasing Strongly Increasing
fiscal may be 50 basis points (5.6% of GDP) vis- Source: FICCI’s Economic Outlook Survey, Q 4 FY1 3
à-vis the budgeted fiscal deficit, going by the
estimates. However, more importantly, the Is prioritizing price stability over economic
consensus fiscal deficit estimate in the next growth justified?
fiscal is 5.3%, indicating that the process of
fiscal consolidation will be long and arduous and
The opinion regarding the current anti-
it may be difficult to plough it back to the levels
inflationary stance by the RBI seems to be
witnessed prior to the crisis.
divided with nearly 44% of the respondents
believed that inflation control should be given
Index of Industrial Production (IIP) predictions
precedence, but this is closely followed by the
reveal a 2.5% growth in current fiscal. FY14 is
39% responses which seem to disagree with the
better at 4.4% consensus estimate.
“prioritizing”.
Meanwhile, the Reserve Bank of India in its
However, there seems to be a growing
quarterly policy review announced on October
consensus that “prioritizing” inflation have made
30, 2012 kept the repo rate unchanged at 8%,
better sense earlier, but may not hold ground
while it cut the CRR by another 25 bps to 4.25%.
now, with the Government making a strong pitch
The Central Bank once again belied the
for reforms (fiscal consolidation included)
expectations of the industry and indicated that
“while the policy stance has shifted towards
W hat matters to Business es
addressing growth risks, the objective of
containing inflation and inflationary expectations
In the Survey we asked the respondents to rate
cannot be de-emphasised”. the factors which mattered to the Businesses in
India, with a view to gauge the Business
The move did come as a major disappointment
Worries and their Biggest Impediments to
for members of India Inc. The Bank finds itself in
growth.
a sharp growth inflation conundrum and
indicated some policy easing only in Q4 FY13.
Demand conditions, with nearly 71% of
responders assigning it the rank # 1, seem to be
G lobal and domest ic scenarios
the most important factor for the businesses in
improv ing ov er t he medium t erm
India.
73% respondents are positive about an
Political stability, relevant policy action and
7

11. ECONOMY W ATCH
competitive environment were closely following
as factors which if not worked on constructively
may deter the Indian business growth.
Rural spending cont inue t o outpace
urban consumpt ion
According to the recent NSSO data released, for
the first time since economic reforms in India
were launched in the early 1990s, rural
spending in the country has outpaced urban
consumption.
More than 80% of the responses were
affirmative of the above fact. In fact, a recent
study reveals a decline in rural poverty, owing to
an 6.8% annual real rural wage increase for the
last four years, the downside seem to be
hedged. Additionally, with the consumption
pattern in rural India shifting from necessities to
discretionary goods, there is a greater likelihood
of more being spent on education, health care,
entertainment, etc in the coming years!
8