Nomura sees rural demand gathering steam in 2024

Rural demand is likely to pick up pace in 2024 owing to moderation in inflation, replenishment of rural savings after the Covid pandemic, increased liquidity on the back of pre-election spending, and a likely stable regime, Nomura said Wednesday.

The global investment banking firm noted that even though growth is expected to slow down in the coming fiscal to 5.6% from 6.7% projected in FY24, mass consumption may rise as easing price pressures support mass consumption.

"With inflation expected to moderate to 4.5% in FY25 from 5.6% in FY24, the replenishment of savings that got exhausted during the pandemic for rural households, additional liquidity driven by pre-election spending, and a likely stable regime are all likely to support a pick-up in rural volumes that remained below par through 2023," it said.


The agency also pointed out that rural wages running higher than rural inflation are also to play a role in supporting consumption, which witnessed a nascent recovery in 2023. "Organised firms have highlighted that rural demand remained weak in 2023; however, industry data indicates that rural volumes have seen a sequential improvement since 4QFY23, it said.