Festive Season: India is battling high inflation by raising the cost of borrowing, which in turn carries the risk of reducing consumer demand.
Luxury Products For Diwali
Festive Season : Household spending trends in India ahead of the festive season are indicating a widening of the demand recovery gap as inflation hovers around 7 per cent and the unemployment rate continues to rise. Consumer-goods makers are reporting strong demand for items priced around $2,000, while industry data on sales of budget phones and motorcycles under $100 indicating rural demand is becoming a concern. Satish NS, senior vice president of Qingdao’s India unit, said China-headquartered Haier Group Corp., sales of front-load washing machines and double-door refrigerators cost around 150,000 rupees ($1,878).
With that said, low income people being unable to regain their pre-pandemic hunger is a worrying development for an economy that relies on private consumption for nearly 60 percent of its growth. India is battling high inflation by raising the cost of borrowing, which in turn runs the risk of reducing consumer demand.
Economy battling with many adversities
Abhishek Gupta of Bloomberg Economics said that when the economy is doing well, concerns about inequality tend to overshadow overall growth, but the output gap currently remains negative and the economy is battling a number of adversities, including high inflation and risks of recession. , so that poses an additional risk to the speed of recovery. He said low-income individuals, as defined by the Pew Research Center, who live on $2.01–10 a day, are 1.16 billion of the nation’s roughly 1.4 billion people.
Their spending power is decreasing with rising cost of living, according to data compiled by Banco Santander SA, showing that Indians allocate 30 percent of their total income to necessities like food, compared to only 10 percent in China . Another economic statistic – the rising unemployment rate, is probably adding to the crisis.
Strong demand for premium offerings
Kamal Nandi, Business Head, Appliances Division, Godrej & Boyce Company says that we are not seeing the segment growing at a large scale compared to pre-pandemic levels, which are like banks of other companies. This sentiment was echoed by Berger India CEO Abhijit Roy, who pointed to stronger demand for premium offerings this year in urban centers as compared to rural markets. Where opportunities and pay lag behind in cities.
The recovery on the demand of urban centers is worrying
Dharmakirti Joshi, chief economist at Crisil Ltd, a local arm of S&P Global, said that this could happen given the sharp rise in salaries for the high-income group, for now four out of five affluent Indian consumers buy premium instead of late. Are willing to pay 10 percent more for products, according to a survey by Agility Research & Strategy. Devendra Pant, chief economist at India Ratings and Research Pvt, a local arm of Fitch Ratings Ltd, said the recovery to a large extent on demand from urban centers is worrying as such growth is unlikely to be sustained.
Source: www.tv9hindi.com”