Economic Highlights
New Delhi, 31 October 2022
Buyers Boost Diwali Mood
INDIA VIES TO UNSEAT UK
By Shivaji Sarkar
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
(Copyright, India News & Feature Alliance)
|