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Indians Back To Spending At Pre-Covid Levels, But...

By Ashli Varghese, Sharleen D' Souza
January 15, 2024 09:43 IST
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Lower income groups earning less than Rs 100,000 a year are yet to recover as are those earning between Rs 100,000 and Rs 200,000.

IMAGE: Women shop for jewellery at the Sarojini Nagar market in New Delhi. Photograph: Mohd Zakir/ANI Photo

Indian consumer sentiment has bounced back to levels not seen since before the national lockdown in March 2020.

The Centre for Monitoring Indian Economy (CMIE) Index of Consumer Sentiments for December 2023 has surpassed the figures last recorded in February 2020, a month before the government imposed a lockdown to curb the spread COVID-19 pandemic.

Consumer sentiment nosedived in the months that followed.

However, this recovery seen at the national level conceals disparities between regions and income groups, as revealed by an analysis of CMIE data.

The index, which has been available since September-December 2015 with a base value of 100, shows fluctuations that mirror changes in consumer sentiment across various regions and household incomes.

The country's overall index value stood at 106.74 in December 2023, a slight increase from 105.32 in February 2020.

Urban families, however, continue to report lower values, with the index at 101.83 in December 2023 vis-a-vis 104 in February 2020.

In contrast, rural India's index value reached a high of 109.12, the highest since December 2019.

The experience of companies and market trackers point to momentum building early in the year but signs of slowing down since then.

According to Mayank Shah, senior category head at consumer goods company Parle Products, the rural segment witnessed an uptick in the first three quarters of 2023.

But he warned of subsequent signs that sentiment may not remain as robust.

"The rabi crop (harvested in 2023) did well. Rural demand was reasonably good in the quarter ended March and continued to do well until September. However, we have seen pressure since then," he further said.

Rural demand has been muted in the December quarter, he added.

Akshay D'Souza, chief of growth and insights at Karnataka-based consumption tracker Bizom, noted that fast-moving consumer goods (FMCG) growth has been tepid, with festive consumption falling short of expectations.

Despite cautious spending in rural areas in 2023, businesses continue to build direct distribution networks there.

"In 2024, we expect that rural will be a key driver of growth for FMCG amid a stable economy and consumption getting triggered by falling prices for essentials. We expect that this will fuel discretionary products, too, in the next couple of quarters," D'Souza said.

However, recovery continues to be uneven across different income groups.

Lower income groups earning less than Rs 100,000 a year are yet to recover as are those earning between Rs 100,000 and Rs 200,000.

Those earning between Rs 200,000 and Rs 500,000 per annum show an improvement in sentiment, as do those with an income of Rs 500,000-Rs 1,000,000.

The highest earners, however, are still struggling to recover, according to the data.

The poorest segment -- comprising those earning less than Rs 100,000 a year -- is the only income category where more households reported worsening financial conditions compared to the previous year than those reporting an improvement.

Feature Presentation: Aslam Hunani/

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Ashli Varghese, Sharleen D' Souza
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