Liquidity in the hinterland could turn a corner after a pick-up in infrastructure activity in rural India, according to Mahindra & Mahindra Financial Services Ltd.'s Ramesh Iyer.
“What it (rural India) is waiting for I think is the infrastructure to open up,” Iyer, managing director of the non-bank lender, told BloombergQuint, adding the green shoots of growth are already visible in some states. “But if it opens up across then we will see a real boom in the rural economy.”
Sales of fast moving consumer goods in rural India was the slowest in seven years as sagging incomes and a broader credit crunch weighed on spending in the country's hinterland, where the majority of its population lives.
Iyer, however, said cash flows from rural infrastructure spending, besides the usual farm payrolls, could revive consumer demand. “Rural depends on two cash flows: the farm cash flow and the infrastructure cash flow,” he said. “This means a lot of infra activity needs to happen, people deploy their assets, labour gets deployed, money comes in and consumption begins to happen.”
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