Economic activity in rural parts of Maharashtra is expected to stay healthy and surprise on the upside over the next 12 months, a report from Ambit Capital Pvt Ltd has stated. Maharashtra is not the only state where there will be little rural distress, West Bengal and Andhra Pradesh, too, are in a similar situation, the report says. So the BJP could well deliver better-than-expected numbers in these three states in the general elections of 2019, the report added.
Conversely, Haryana, Punjab, Madhya Pradesh and Uttar Pradesh will continue to deal with severe rural distress. The study, which looked at large Indian states experiencing rural distress, drew its conclusions based on three parameters.
One, it looked at state-by-state climate data, particularly rainfall from the fiscal year 2015 to fiscal year 2019. Maharashtra (and most southern states) reported only two years of deficient rainfall while West Bengal and Rajasthan reported none. On the other hand, Uttar Pradesh and Madhya Pradesh had three years of deficient rainfall while Punjab and Haryana respectively reported four and five years.
Two, the study looked at rural wage growth. Maharashtra reported 4 per cent in FY18, below the all-India average of 5 per cent. Andhra Pradesh and Gujarat reported 6.2 per cent and 5.5 per cent respectively. But Uttar Pradesh, Madhya Pradesh, Tamil Nadu, Rajasthan and Haryana saw rural wage growth collapsing to sub-2 per cent levels.
Three, the study looked at the dependence of a state on agriculture. Even if rainfall is low, low agricultural dependence can limit rural distress. Across India, the share of agriculture in GDP is 17 per cent. For Maharashtra, it is only 10 per cent. But for Madhya Pradesh it is as high as 37 per cent, and as much as 26-29 per cent for Uttar Pradesh, Rajasthan, Punjab and Haryana.
The report concluded that states with higher levels of rural distress will see strong anti-incumbency and are therefore, also likely to see increased spending by state and central governments.