Can Tractor sales propel Indian Economy?

 

The ongoing debate about whether the agricultural sector will save the day for the Indian economy when there is rapid spread of the pandemic? This is a year in which the wider economy is expected to contract, with agriculture expected to continuously grow.

Tractor sales in India soared 22.5% to 92,888 units in June 2020. In June 2019, it sold 75,858 tractors. Does this mean a recovery in the rural economy? Can the rural economy push the Indian economy ahead in the coming months?

If we compare sales from June 2020 with sales from June 2019, it suggests a revival in the rural economy. What we need to consider though is that the period between April and June is the traditional tractor sales season. Sales from April to June 2020 dropped 13.7 % to 1,65,156 units relative to last year. That's the lowest in four years. High June sales is also due to the pent-up demand, considering the April and May lockdowns. Only if the tractor sales figures remain robust in the months ahead, then we can suggest a marginal recovery in rural economy.

Following the lockdown and disruption caused by coronavirus, tractor sales did not decrease as much as other vehicles such as two-wheelers and cars. This is mainly because the agriculture sector was not as badly affected by the pandemic as the other sectors with strong rabi crop harvest and a good monsoon season helped boost the sale of tractors, government cash assistance for farmers and funding availability further increased the growth momentum.

1. Escorts announced 9.5% growth from 4,860 units in July 2019 to 5,322 units in July 2020
2. Mahindra & Mahindra’s Farm Equipment Sector reported 27% growth from 19,992 units in July 2019 to 25,402 units in July 2020
3. Sonalika Tractors announced 71.7% growth in domestic sales to 8,219 units, compared to a year ago

The Center has provided an increased distribution of Rs 1.5 lakh crore cash in rural India by the purchase of crops at MSP and other benefit schemes, according to Citibank.

The farmers had a good rabi crop harvest including better yield they are queuing up to buy tractors in cash. A normal tractor costs just about Rs 5 lakh, and manufacturers give preference to cash-paying farmers. Not a lot of farmers are currently applying for loans to purchase tractors. In addition to buying agricultural goods such as wheat at minimum support prices (MSP), some state government such as Chhattisgarh and Madhya Pradesh have given farmers incentives, leaving them with a significant amount of cash they also have received good amount of bonuses thus demand for tractors is such that the manufacturers running their units at full capacity.

Besides these, waiver of farm loans by states like Maharashtra also helped farmers loaded with cash. Companies plan to hit maximum capacity in August, after fixing supply chains that collapsed in the months-long lockdown to contain the coronavirus. But it should be noted that the increased tractor sales merely indicate that extremely rich farmers are doing well. They do not represent the state of the agricultural economy as a whole nor the rural economy in this regard.

There's more to the agricultural economy than just rice and wheat. As supply chains have broken down, the hotels and restaurants have been shut down, everybody, from vegetable growers to fruit growers to dairy farmers and poultry farmers had a tough time in recent months. Given their perish ability there are no MSPs for vegetables and fruits. Here it is worth mentioning that since 2012-13, total horticulture production has surpassed food grain production, from vegetables to fruits, spices, flowers, honey to plantation crops. Therefore, it is not right to say that the whole agricultural economy has been doing well there are many farmers out there with very little government support.

Agriculture is the only sector expected to grow this year which is a great news. Nevertheless, it is important to remember that in 2019-20, the scale of the industry which includes forestry as well as fishing, was just 13.4% of the total economy which is too small to propel the economy. Over the years, the size of agriculture as a share of the economy has also shrunk.

To sum up its difficult to say that increased tractor sales will help in reviving the economy, though rural economy may end up being in a better shape than the urban economy during the course of this year, but it is not in a position to drive growth across the overall economy

 

 

 

Has Pandemic made MBA less attractive?

 

The Indian government announced on 24 March that it will lockdown nationally until April 14, which was later extended till 3 May. A lot of B-School campuses across India shut down their campuses as a preventive measure, following the government's order to close all educational institutions. Many government and private B-schools postponed courses, semester exams, convocation, and rounds of group discussion & personal interview.

The uncertainty over the next two years about securing internships and jobs has affected the decision of many aspirants to delay their plans. The pandemic has interrupted the plans of many young people who expect to attend B-school this year in India and abroad. For the fall semester schools expect a less diverse community. Embassies and consulates are closed, so the issuing of visas has come to a halt. Airplanes are grounded across the globe which means study trips are cancelled which is a major part of MBA hence, many schools will switch to national and regional students to compensate for the global mobility disruption.

Most are worried about the effectiveness of the programme, considering the extent of the social and economic damage done by Covid-19. Leading B - schools in India are unfazed by the ongoing economic downturn. However, the middle and lower ranking B-schools have taken on a big hit, especially in terms of placements, which rely on sales jobs involving travel.

Some B-schools have changed their course length and teaching method to respond to the transition. Indian School of Business (ISB) restructured its curriculum and went through the lockdown online for two months, and reducing semesters from five hybrid models to four weeks as not all students will be able to attend on-campus classes when they begin. It also offers them the chance to reach out to a larger pool of leading foreign faculty and industry leaders. Many students are not happy about this and feel that online classes do not justify the high fees and whether online education can match the quality of personal education with job prospect has made MBA a devalued asset among MBA aspirants.

Campus experience and networking are key aspects of selecting an institute. The networking is a big part of an MBA course. If institutes invite business leaders for guest lectures, students get a chance to interact with the person. If it's online then it’s not possible to interact with everyone. Those seeking to join a business school are also wondering whether it would be useful to have an MBA degree given the changing business landscape. Managing digital and remote jobs would also be needed further. 

It is a phenomenon that has been going on for some time, but Covid-19 has significantly paced it up Many organisations now feel that they need a greater awareness of how to manage and maintain connections and communication from a distance. MBA degree is seen valuable by millions of Indians every year. Not only is it a chance at a better pay, the degree is a gateway to switch career but the reputation of the school, what's being taught, the alumni network and the kind of companies that knock at the door during campus placements also matters a lot.

The pandemic impact and the slow employment market has affected long tail of mediocre B-schools which is now facing a crisis. Campus placements typically take place between December and April, due to the lockdown, many management institutes either stalled or left the placement phase unfinished by 2020. Many Tier II and III B-schools are now struggling to place their student's, pandemic has thrown the schedule and plans of business school students into total disarray.

Anticipating a slump in the economy due to the spread of Covid-19 summer internships of many b-school students has been postponed, cancelled or cut short from eight weeks to six weeks some of them have gone online this will impact the final placement of 2021. Compared to the last placement season, the average salary offer is up 7-15 percent in top B-schools but the scenario for Tier II and III B-schools is totally different. Online delivery of content is a new beast and professors are ill-prepared. Schools need to revisit what they are teaching as well as develop new content, as business models has experienced drastic changes in last two months.

Every business at the moment is building a new cost model and new level of efficiency in operations by inducting more technology which should be taught by B-Schools and if they are not including such things in their curriculum then they will surely be left behind.

“Schools needs to focus on skills such as creativity, crisis management, conflict management, empathy, leadership, strategic thinking, understanding technological progress, disruption, problem solving, and dynamic decision making to make an impact on the market”.

At last i will like to conclude by saying, MBA is valuable to those who want to learn to manage in complex environments. The more students are willing to learn and grow, the more they will get out of their experience.