A British-born, British-US-educated, British man, Rishi Sunak, the new British Prime Minister, is being celebrated with great glee, but it is not him, rather the Indian consumers adding glory to India. They have taken enough strides this Diwali to turn the corner of Indian economy after gloomy years of the pandemic-hit shut country.
Expectations from Sunak for India is stretching it a bit too much. He has to fend for his house first and India has to do more for itself to compete worldwide. And while the Indian consumers are back with enthusiasm, there are grey areas indicative of the post-covid bumps yet to normalise. Amid such a scenario, gold, housing and automobiles made a significant mark. Consumers purchased 39 tonnes of gold and billions of rupee purchases of housing units, cars, white and brown goods, textiles, garments, and other purchases. Gold purchases were made at Rs 50,139 against Rs 47,644 a year back. It was mostly jewellery and digital payment was largely the norm.
“The gold demand grew by 80 per cent in the domestic market in the July-September quarter following a strong pick-up in economic activity and improved consumer demand,” says Pankaj Arora, President of All India Jewellery and Gold Federation. As per its estimates, sales of gold and silver coins, notes, sculptures, and utensils in the country peaked at Rs 25,000 crore. TheIndian Bullion and Jewellers Association (IBJA) peg it at Rs 19500 crore, a little higher than 2021.
There are indications of economic buoyancy coming back. The ANAROCK July-September housing sales data are up 41 percent possibly touching 3 lakh units as the trend was for 2009-2014. Since that year sales dropped by almost 68 percent in the Delhi and NCR and 27 percent around Mumbai. The worst was 2016 when unit sales dropped drastically due to demonetisation followed by RERA and GST. Housing is double taxed as it has stamp duty and now also GST, which should better be waved off to add to the growing pace. Housing sales rise despite interest rate hike is encouraging.
Similarly, car sales jump by 10.94 percent to 1,464,001 during Navaratri and Diwali against 2021 sales of 1,319,647 units, according to the Federation of Automobile Dealers Associations of India (FADA). Sales rebounded as the semiconductor shortages ease,says the Society of Indian Automobile Manufacturers (SIAM). Production for the month also rose 88 percent to 372,126. The rural demand being low, entry level passenger cars have poor sales though overall it increases by 38.4 percent or 1,026,309 units. Two-wheeler sales, largely now a rural phenomenon has risen to 13 percent at 1,735,199 units. Monthly sales for mopeds fell nearly 23 percent to 47,613 units.
Though gold purchases considered auspicious may have taken place almost uniformly across, there has been subdued sales of FMCG products in the rural areas with retail inflation holding firm. The Marico group noted that the sales in the rural areas are much below the norm. The urban and premium discretionary segments fared better.
Confectionery sales declined 10.3 percent and beverages and home care slumped by 2.5 and 5.5 percent respectively owing to change of preferences and quality complaints about the products. However, select sweetmeat sales have seen increases though largely khoya were avoided along with beverages as part of the change in consumer preferences.
Neighbourhood political relations also has an impact on dry fruits and spices. The machineries have been careful and slow in clearing the dry fruit packages of raisins, pistachios, apricot, figs, asafoetida and shah jeera coming from Afghanistan transiting through the Wagah border. Security checking of each consignment is time-consuming.
The textile segment also had an average business. Surat’s textile mills could have about Rs 8000 crore or 50 percent less sale. The retail demand has been low indicating that people at large are avoiding purchases. Wholesalers are not picking up garments, sarees and other fabric because of a market singed by high prices and miserly consumer behaviour, according to Confederation of All India Traders. Huge inventory from the past two years with retailers has cut overall sales.
The textile sector had expected that the hike in dearness of Central government employees and bonuses of railway employees would boost sales, but the inflationary trends and Covid backlog could not help the industry. The Retailers’ Association of India note overall 21 percent sales increases but it has not helped the Surat textile mills.
Market connoisseurs mention that in some areas the sales of ethnic or traditional wears such as sharara and ghagra, were seen to attract buyers.Overall, the low-end markets of Delhi at Janpath, Red Fort, Old City, Lucknow, Jaipur or other places have reported subdued sales. Different sellers at these markets say the footfall itself has been low.
It is often alluded that e-commerce,ledby global giants, has affected the retail business. According to the World Bank, e-commerce is only 1.6 percent of the total Indian retail business. The e-commerce firms expected that their sales would reach $11.8 billion, according to Shopify, before Diwali but so far they have not come out with a figure of the final sales. Softbank-propelled Meesho claimed there have been low-ticket purchases and two majors Flipkart and Amazon clocked the larger share of the $5.7 billion or Rs 40,000 crore festive sales with mobile phones leading the sales.
The global instability, inflation, the Ukraine war are hitting the country despite efforts at higher growth trajectory. This growth is now swinging below 7 percent with over 7.4 percent (cumulative 23.6 percent) inflation. It is beyond the RBI comfort zone.
Chief Economic Advisor K Subramanian, however, says, “the stagflationary risk in India is quite low to many economies despite elevated oil prices, falling rupee, unfolding geopolitical concerns and hot red inflation in the part of the world”. Revenue Secretary Tarun Bajaj says tax collections are far better.
Does this mean that by volume India could surpass Britain? Not unlikely, but a lot remains to be done to be actually becoming the fifth largest economy as during Covid certain hardships increased and indicators plummeted. Indian per capita GDP is $2,277.43 and the UK $49,761. The UK has robust trade balance, unlike India’s which has to improve. Sunak has tough challenges, but Indian economy has tougher. However, Diwali has given hope that by the coming year India would get rid of the glitches and make its journey more meaningful. —INFA
