In 2022-23, the Indian economy is expected to have grown by around 7 per cent. In the April monetary policy committee meeting, the RBI pegged the economy to grow at 6.5 per cent in 2023-24. However, the uneven nature of this growth must be taken into consideration by policymakers as they formulate policies.
Across a range of sectors such as housing, automobiles, two-wheelers, mobile phones, the incoming data points towards a continuing divergence in consumption patterns — robust sales at the top end of markets, alongside subdued sales at the lower end of the spectrum
By: Editorial
May 1, 2023 06:35 IST
In a few weeks from now, the National Statistical Office will release its estimates of economic growth for the fourth quarter (January-March) of 2022-23, and its provisional estimates for the full year. While this will shed greater clarity on how household consumption fared during this period of uncertainty, data on key consumption segments released so far points towards mixed trends in private consumption. Across a range of sectors such as housing, automobiles, two-wheelers, mobile phones, the incoming data points towards a continuing divergence in consumption patterns — robust sales at the top end of markets, alongside subdued sales at the lower end of the spectrum.
Take for instance the automobile sector. Maruti Suzuki accounts for a significant share of the cars sold in the country. In the fourth quarter, sales of its cars in the mini and compact segment (this segment accounts for almost two-thirds of the company’s total sales) actually contracted. In comparison, sales of its utility vehicles continue to grow at a robust pace. Worryingly, its chairman, R C Bhargava, is reported to have said that demand for small cars has remained flat and that the company does not foresee any change in this financial year as affordability remains an issue. In the case of housing, there are also indications of the affordable housing segment coming under pressure. As per Anarock research, the segment’s market share has dipped from 38 per cent in 2019 to 26 per cent in 2022 due to a combination of factors, including the economic condition of buyers. And with demand for this segment coming under stress, Anarock observes developers changing gears, launching more projects in the mid and premium segments. Reports do point towards healthy demand for these segments across major cities. Similarly, as per Counterpoint Research, even as India’s smartphone shipments have actually declined, the premium segment has registered robust growth, and is likely to have almost doubled its share during January-March 2023 as compared to the same period last year. In the case of two wheelers — another indicator of household demand at the mid and lower segments of the income distribution — while domestic sales did rise by 17 per cent in 2022-23, they still remain lower than levels seen in 2018-19 as per data from SIAM. And while the number of individuals working under MGNREGA have fallen from the highs observed during 2020-21, they remain higher than pre-pandemic levels.
In 2022-23, the Indian economy is expected to have grown by around 7 per cent. In the April monetary policy committee meeting, the RBI pegged the economy to grow at 6.5 per cent in 2023-24. However, the uneven nature of this growth must be taken into consideration by policymakers as they formulate policies.
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