Large world economies survive global disasters by their sheer inner strength and a well regulated domestic market. This helps turn tides, perhaps slowly, yet definitively and positively in a way that benefits all.
We need to have faith in the favourable demographic profile driving consumption patterns
Large world economies survive global disasters by their sheer inner strength and a well regulated domestic market. This helps turn tides, perhaps slowly, yet definitively and positively in a way that benefits all.
India is one such which has been somewhat resilient to global disasters.
We have risen from hard times by harnessing our internal market power and elevating product quality. Make in India was a driver – it led to Indian manufacturers bringing in the best of technologies for consumers. There was a definitive shift from borrowed technologies to those developed in India, making products and services comparable to the world's best, if not better.
Several drivers have been strengthening our economy. The upcoming young population has been a significant catalyst to this growth. The Economic Survey 2019-20 estimates that 62 per cent of India's population is in the age group of 15 to 60, the young and the experienced, that help elevate manufacturing, services and developing technologies. The young have been employed and have been earning higher salaries for their services. This has led to a disposable income with no liability of dependants available to the largest sector of India's earning population. This surplus income will shape the growth across industries. With the country opening up further in the post-COVID period, this demand surge will play a definitive role in consumption patterns.
Visible rebound
The trend is visible and is gaining momentum on a day to day basis. When all was shut bringing the country to a standstill, jobs were lost, labours migrated, political and economical, chaos not just with us but also across the world. Spending was cautious as income for all dropped to the bare minimum.
After the lockdown was lifted from May, the trend to revive and get back to normal gathered pace. Demand for consumer products rose in several industries as consumer patterns changed to quality products at affordable prices. Further down the year and in 2021, people have gone back to their everyday work schedule and have now disposable income at hand. This will lead to overall growth in consumption across sectors.
There is money in the stock market
Many from the young and dynamic age group chose to explore the stock markets to make a living. A quick look at numbers reveals that thousands of retail investors have thronged the equity markets for the first time amidst the pandemic-induced volatility. It is estimated that over 60 lakh new investors joined the markets during the period. Most were in the average age group of 30 years. This clearly indicated the unwavering investment appetite among the youth during the pandemic.
Positive indicators in construction, auto
The real estate and automobile industries are considered a country's growth indicator as they point to income surplus and lead to employment creation.
The lockdown severely disrupted these industries due to stoppage of construction activities and a ban on mobility. However, recent industry reports indicate that both the sectors are now witnessing a fast pace of recovery. Compared to the July-September quarter, housing sales rose more than 50 per cent in the top seven cities between October and December.
Similarly, with people preferring their own transport over public transport, personal two and four-wheeler market seems to be on a rebound. For the September quarter, it increased by 17 per cent. Automakers predict more robust sales growth in the December quarter as well.
Power up
During the initial lockdown period, power consumption shrunk by more than 25 per cent, and the near standstill led to this trend to continue till August. With the implementation of the unlock process, power consumption has begun to rise once again. International Energy Agency's recent report predicts that India and China will lead the global power demand growth in 2021.
GST collections rise
After a dip in net tax collection in the first half of the year due to the pandemic's impact, collection of Goods and Services Tax (GST) has witnessed a rebound. This clearly indicates that the economy is on the path to recovery. The GST collection for December 2020 rose 11.6 per cent year-on-year to Rs 1.15 lakh crore, the highest ever monthly revenue since the system was implemented in July 2017.
e-commerce gains
Since the outbreak of the pandemic and the ensuing lockdown, retail sales declined as people bought only essentials. The festive and marriage season's onset saw an increase in sales as people started spending their surplus money from savings. It is estimated that sales during the Diwali season increased by 10 per cent compared to the previous year. With consumers adopting a digital-first approach for shopping, traditional sales also started adopting digital channels, supporting sales revival.
To conclude:
We need to believe in the Indian growth story and have faith in the favourable demographic profile driving consumption patterns. Already, there are distinct and visible signs of revival in consumption across various sectors. This revival in demand is primarily led by India's young earning population. It will lead to an intrinsic and continued demand for multiple products across industries.
The author is the President of ANMI- Association of National Exchanges Members of India