Consumption rising but facing some stress

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Consumption rising but facing some stress

  • The Finance Ministry asserted that consumption indicators shows a steady growth trajectory.
  • FM cites growth in personal loans as demand uptick marker and surge in gold loans reflects strain.


  • The Ministry cited a robust 14.3% growth in personal loans.
  • But increase in loans against gold is an indication of strain on individual incomes and cash flows.
  • Currency with the public also increased.

Various Indicators of stress

  • Private consumption to grow cautiously as demand for money to rise with every new infection.
  • Private investment along with the complementary support of public investment in infrastructure - continue to gain traction.
  • Currency in circulation -  indicator of holding cash for precautionary purposes.
  • As 3rd wave recedes - currency with the public is expected to reduce with an uptick in consumption.
  • As uncertainty and anxiety caused by the virus recedes - consumption will pick up and the demand will revive. 
  • It will facilitate the private sector with investments to augment production to meet the demand.

Some sign of recovery

  • In december and november, Index of Industrial Production grew by 13.9% and 6.6%, respectively.
  • Consumer durables output was up 20.4% during 2021-22.
  • Non-durables production risen 5.4%.

A positive note

  • The year-on-year contraction can be attributed to high base during last year when both indices crossed their pre-pandemic levels.
  • But with passenger vehicle sales returns to pre-pandemic levels in January and two and three wheelers reporting month-on-month improvements in sales, it signifies the growth track for the economy is set and its only a matter of time.