Consumer mood may be improving and about 48% of them are set to spend more in the coming months the survey said. The survey added that these consumers surveyed want to spend on travel, renovating homes and buying home appliances.
“48% of consumers plan to spend, starting from the minimum amount of INR 1000 extending up to INR 50,000 on purchasing discretionary products or assets in the next 4 months. One of the big takeaways is that 10% households plan to spend over INR 50,000 on discretionary purchases in the next 4 months while 21% households plan to spend between INR 10,000-50,000 in this period. This would mean good news for many sectors of the economy that saw slowdown in consumer demand in the first six months of FY 20-21,” the survey said.
Many economists have argued that India could see a “V” shape recovery. This would mean that a sharp rise in the Gross Domestic Product (GDP) would follow the sharp decline. India’s GDP declined for two consecutive quarters in April-June and July-September.
The survey added that 66% of consumers spent Rs 1,000 or more during the festive season; consumer spending surged 10% higher than anticipated. Also earnings and savings are expected to be lower in FY20-21 for over 60% households; economic recovery driving improvement in consumer sentiment and about 10% households expect to spend over Rs 50,000 in discretionary purchases in the next 4 months.
“Demand in sectors like travel, tourism, home renovation and repairs took a significant hit during this period as many remained locked in houses and were reluctant to get any home renovation work done due to the fear of the virus. Similarly, most families did not undertake travel by air, train or road due to lockdowns and spread of COVID-19,” the LocalCircles survey said.
“With the economic recovery seen in the last 3 months, there is clearly a rise in optimism and 15% fewer households now expect their FY 20-21 earnings to decline in comparison to last year. While for the majority of the households, the earnings this year will be lower than last year. The real story is in the reduction of uncertainty about the future. Many consumers are now confident that though this year has been impacted, they haven’t lost their job and things are getting back on track with their business or employer’s business, and they will likely see their earnings increase or go back to previous year levels,” said Sachin Taparia, chairman of LocalCircles.
The survey was based on 44,000 responses received from citizens across 302 districts of India. 62% respondents were men while 38% respondents were women.