Festive demand driving the economy: a sign of consumer confidence
STORIES, ANALYSES, EXPERT VIEWS
The Indian economy doing so much better than its peers in Asia because of the strength of its domestic demand, according to Manas Chakravarty (Consulting Editor at Moneycontrol). “Unlike the export-oriented economies of East and Southeast Asia or investment-driven China, it is domestic consumption that has powered India’s growth. And the current festive season is proving once again the strength of the Indian consumer.”
Festive demand: Reports point to a surge in consumer spending during the ongoing festive season. Sales of cars, TVs, mobile phones, jewellery, cosmetics, chocolates, alcohol et al have already overtaken spends during the entire festival period last year. And the second half of the festive season is yet to begin. After many years of forced austerity, the good times are back and the Indian consumer is once again indulging herself. E-commerce firms, which had kicked off their sales promotions early, are expected to record 30 percent growth in order volumes during the festive season compared to last year.
In the RBI Consumer Confidence Survey last month, the current situation index (CSI) reached a four-year high. One reason, of course, is rising incomes. Another is rising confidence in the future. The RBI survey’s Future Expectations Index is at its highest since July 2019 and higher than most of 2017 and 2018. “Optimism is in the air,” says Chakravarty.
Both the finance ministry’s as well as the RBI Bulletin’s State of the Economy reports point to robust consumption demand. The IMF recently revised upward its growth outlook for India as a result of stronger than expected consumption growth.