Consumption rising but facing some stress

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Last Updated17/02/2022

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.

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.

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%.

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.