Mint Rural Distress Index:
The index provides equal weightage to fall in farm wage growth, which affects the purchasing power of agricultural labourers, and fall in tractor sales growth, a proxy for rural sentiment and demand.The index captures more than just a fall in agricultural production, which is only one aspect of the rural economy in India.
Three components of Mint rural distress index are:
- Growth of farm output
- Rural wages
- Tractor sales
The Mint rural distress index has been calculated by using year-on-year growth figures of agricultural GDP, real rural wages and tractor sales. The growth rates for each of the components have been normalized to a scale of 0-1 by using the following formula: Normalized value = (Maximum value – Value for reported quarter)/ (Maximum value – Minimum value).
The Mint Index value tend to 0 in on periods when growth figures are higher and vice-versa. A value of 1 would indicate the highest level of distress over a given period. The index is an average of the three normalized values. Therefore, lower the agricultural output growth, lower the growth in tractor sales, and lower the growth in real wages, higher will be the index value.