Crisil ratings on Tuesday said that weak growth in rural income will lead to de-growth in tractor sales volume by 5-7 per cent this fiscal.
The rating agency said weak growth in rural income, moderation in rural infrastructure spending, higher channel inventory, and the effect of a high base will lead to de-growth in tractor sales volume by 5-7 per cent this fiscal, from an all-time high of 8.78 lakh units in fiscal 2019.
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Crisil said that "rural incomes were impacted towards the second half of last fiscal because crop production was flat after two years of 5-6 per cent growth, and farm profitability declined due to weak pricing.
"Consequently, rural wage growth was lower at 3-4% as compared with an average 6% in the preceding two fiscals, " it added.
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Besides, it also noted that lower growth in spending on rural infrastructure has impacted non-farm tractor demand in recent months.
Additionally, exports, which contribute 10-11 per cent of sales, also declined 28 per cent in the first quarter of this fiscal due to moderation in demand from Latin America.
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