27th March

Solo Fight

The article talks about the poor states of affairs with the Congress party as it is left alone in some of the major states like UP, Bihar and Tamilnadu. While fighting solo gives Congress an opportunity to rejuvenate itself in these states but at the same time there are risks too.

While NDA is in trouble with BJD ending its alliance with BJP, Congress too goes through similar pain. As Congress is left alone in UP and Bihar over seat sharing issue with RJD and LJP, Rahul Gandhi put a brave face in media calling it an opportunity to revamp the prospects of party in these two states. Similarly in the south as well, PMK signed up with Jaylalitha’s AIADMK to leave Congress alone. Congress is now left with only NCP in Maharashtra, DMK in Tamilnadu and Trinamul Congress in West Bengal. Even NCP leader Sharad Pawar revealed his intentions for the top job. Strategically the Congress move seems logical since regional parties gain a greater bargaining power as Congress tie up with them for the elections. But being alone as well has its own risks. Congress doesn’t have much time left as elections are less then a month away. The party has welcomes candidates who hasn’t got ticket from any party but that is hardly the way to rejuvenate the party. In South, even if Anbumani Ramadoss denies any strife with Sonia Gandhi, almost entire PMK was in favor of tying up with AIADMK instead of UPA. 

Finally, if Congress’ poll strategy works, it would be a big win. But if it doesn’t then it will have a weak hand in post-poll bargaining. 

Country Music

The article explains the role of rural sector in decoupling the global recession from Indian economy. As the demand increases in the overall rural market, it opens new opportunities for India Inc to improve economic health.

While urban areas show sluggish growth, or in some cases fall as well, rural market shows increase in demand everywhere from cars to two-wheelers, from readymade garments to flat-screen TVs and from DTH connections to life insurance. Demand for FMCG is also on rise. Presently, rural middle-class accounts for 45% of the total national demand in the array of consumer goods. While consumption of urban middle-class contracts, it’s the rural middle-class demand that defies recession. Agriculture has grown at 4% in the last 5 years and besides the bumper harvest it saw 40% increase in the floor price for foodgrains over two years. Besides huge public spending, NREGS scheme, Rs. 71k crore loan waivers and jobs-creating infrastructure projects have helped increased rural spending power. However, the spree may not last longer thanks to the structural anomalies like unviable farm sizes and inadequate marketing opportunities. With large dependency on agriculture, India needs Chinese model of industrialization to fight poverty. Non-farm sector like agro-processing is a sunrise sector with good employment and income-generating potential. Agri-business would prosper with upgraded post-harvest technologies and improved cold storage mechanisms to prevent food losses. 

Improving physical infrastructure is key to rural prosperity and as the industry faces its two major problems – demand decrease and banks’ risk averseness – it’ll take time to regain the business confidence. Proactive approach to rural sector is the key to improve the economic performance in these times.