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Simply put, India is in the process of being physically built out of under-development and poverty. This enormous national effort is imperative to understanding India’s productivity and GDP growth, amongst many other social and political aspects.
The National Logistics Policy of 2022 targets reducing the logistics cost from 16% of GDP to the global average of 8% by 2030. Consequently, as the government’s priority shifted from social spending to infrastructure, each vertical of infrastructure has witnessed a point of inflection.
Agriculture, India’s largest employer, is reliant on the rain. Healthy rainfall leads to high crop yields and, consequently, high rural incomes. Rainfall, therefore, dictates the consumption profile of India’s largest demographic.
Since 2004 (see graph), as irrigation infrastructure improved and the economy successfully diversified away from agriculture (towards urban services), this correlation ended and India delivered high growth regardless of rainfall levels.
However, rainfall still strongly affects demand trends in India, particularly for certain sectors such as durables, vehicles, construction inputs etc.
Source: Taken from annual reports of Ministry of road transport and highways
The National Logistics Policy of 2022 targets reducing the logistics cost from 16% of GDP to the global average of 8% by 2030. Consequently, as the government’s priority shifted from social spending to infrastructure, each vertical of infrastructure has witnessed a point of inflection.