By Nantoo Banerjee
It is good to see that buyers are no longer willing to wait. This October-December festive season hopefully promises to be a buyers’ paradise. The country’s marketing and sales firms have long been waiting for such a situation. Buyers are no longer scared of the pandemic, which is on the decline anyway. India’s busy economic season seems to have started with a big bang. After a 20-month hiatus, Indian consumers are rushing for goods and services — from real estates, automobiles, white and brown goods, gold jewelleries, fashion articles, various luxuries and home decors to travel — like never before.
The print and electronic media are full of advertisements for sale of goods. The shopping malls and roadside retail outlets are attracting buyers in hordes. The online sale got a reasonable push in the last 20 months, mainly because of the pandemic forcing people to stay at home. Now, the business portals are expecting a record growth in commerce during this pick season. As usual, amazon.in leads the pack. Its first phase ‘great Indian festival’ took off last week. Other e-commerce giants such as Flipkart, Alibaba, Snapdeal, the Tata group’s bigbasket, the Reliance group’s Ajio and JioMart, Myntra, IndiaMART, Nykaa, Zomato and One97 Communications are not far behind. They are also ready with big plans to take advantage of the renewed e-commerce boom.
For the first time in recent memory, passenger cars are suddenly in so great demand that delivery of popular brands is facing a long waiting period. Among those in the wait list are: Maruti Swift and Hyundai i10 hatchbacks; SUV Nissan Magnite and the more premium Hyundai Creta, Kia Seltos; and luxury cars from Toyota and Mercedes-Benz. Suddenly, it has turned out to be a ‘great Indian consumer wait’ caused by a swift rebound of demand coupled with worldwide shortage of semiconductors. Domestic appliances, consumer durables and consumer electronics are also in short supply. Manufacturers and suppliers are trying their best to meet the demand hype which is expected to last through the general festivities such as Navratra, Diwali, Christmas and the New Year.
As the demand-supply gap widens, prices of most products are on the surge as customers scramble to get delivery during the festive period. Market reports suggest that waiting period for even high-cost new Rs.100,000-plus ‘iPhone 13’ from Apple’s India online store is nearly a month. Sony’s ‘PlayStations 5’ shows ‘out of stock’ at the company’s official website. The same is the situation for premium sellers like Dyson whose ‘V11’ vacuum cleaner carrying a one-month wait. The washing machine and imported refrigerators from Bosch Siemens also carry long waiting periods.
Several sectors of Industry are busy drawing their mid-term production expansion plans to catch up with the demand growth that promises to last. In fact, the industry and trade are under heavy pressure to cater to both the domestic demand and export market. Imports too are surging. the country’s exports during April-August 2021 grew by 66.92 percent to US$ 163.76 billion. Imports during this period rose by 81.75 percent to USD 219.54 billion. Imports rose to USD 47.01 billion in the month of August alone, according to the Export-Import Bank of India. Although the rise in India’s exports is attributed largely to the low base effect, there has been growth pick-up in advanced economies as well resulting in an increase in the overall global import demand. India’s Gross Domestic Product (GDP) for the April-June quarter of the ongoing financial year 2021-22 expanded 20.1 percent (year-on-year), as per data released by the government, last week. The sharp rise in Q1 GDP data can be attributed to a low base last year. In the first quarter of 2020, the economy contracted 24.4 percent due to the Covid-19 impact. The economy grew by only 1.6 percent for Q4 of FY21 after showing contraction for the first two quarters and turning slightly positive in Q3.
The latest ‘market view’ by the wealth management division of the SBI, the country’s largest bank, noted that the Indian markets were among the world’s best performing markets in September. Incremental excise collection moped up “at three times of the full fiscal oil bond liability, services EMI crossing 18-month high …. increased consumer footfall and streamlined FII and DII inflows were some of the highlighting economic indicators that kept the market participants interested. Market performance outpaced the global headwinds such as China’s real estate crisis, souring bond yields, rising crude oil prices and concerns over the delta variant of coronavirus.” Further, it stated that India’s “GST collection for September stood at INR 1.17 lakh crore which is 23 percent higher than that of same period last year…. The relief measures for telecom sector and the PLI scheme for auto sector boosted the investors’ confidence. Riding on the enhanced sentiments, the coming festive season is likely to fuel the transaction volumes.”
India’s economic upturn is already having a positive impact on its global rating. Only last week, international ratings agency Moody’s upgraded the outlook on India’s sovereign rating to ‘Stable’ from ‘Negative’ in a revision after nearly two years, citing improved financial conditions and a faster-than-expected economic recovery across sectors. The rating agency noted that “the decision to modify the outlook to stable reflects Moody’s belief that the downside risks from negative feedback between the real economy and financial system are diminishing.” Further, it stated that “while concerns associated with a high debt load and low debt affordability persist, Moody’s expects the economic climate to allow for a gradual decrease of the general government fiscal deficit over the next several years.” Other rating agencies are expected to follow suit.
The current demand rush is real and promises to last. This will raise production, investment and employment having a cascading impact on the economy. The financial sector is particularly happy as it will push up the demand for credit and capital. Incidentally, demand from the cash-strapped government sector, traditionally the country’s biggest consumer, is yet to pick up. It may have to wait till the next year’s budget. In a way, it provides a breathing time for the trade and industry which are extremely busy to meet the current flush demand from the public.
(IPA)
