“Healthy rains will surely help the agri economy. We expect to see the consumption going up from rural and semi-urban areas beginning the third quarter and stretching to the next quarter,” Kamal Nandi, VP at Godrej Appliances, told TOI.
Nandi, who also heads the Consumer Electronics and Appliances Manufacturers Association (CEAMA), said categories such as direct-cool refrigerators, semiautomatic washing machines, and air coolers are expected to get a fillip as rural economy strengthens. Rural and tier-2 towns contribute nearly 35-40% to sales of appliances industry.
Economists said forecast by the weather office will help boost market sentiment. “The prospects of a weak El Nino will also quell any fear of a drought. However, anecdotal evidence suggests that the most crucial factor in any monsoon is the spatial and temporal spread,” said Soumya Kanti Ghosh, principal economic adviser at SBI. “We also find that in recent years, there is no direct causation of deficit rainfall and increase in food prices,” he said.
Economists said the prospects of near normal rains could trigger a rate cut to boost demand. “It projects a well-distributed rainfall scenario that should benefit farmers in the autumn kharif harvest. This supports call of RBI monetary policy committee to cut rates by 25 basis points to 5.75% on June 7, given governor Das’s dovish Friday IMF speech,” said Indranil Sengupta, economist at BofA Merrill Lynch. “We will review the possibility of the RBI cutting rates again on August 6 after Met’s second early-June rainfall forecast. On our part, we continue to see 2019 as a year of lending rate cuts.”