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.