: Real household spending growth in India set to remain muted at 7.0% #FinanceIndia #StockMarketNEWS #Business New Delhi: Even as the Indian economy posts a 8.4 per cent GDP growth in Q2 FY 2021-22,

@StockMarketNEWS Mon 06 Dec, 2021

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Real household spending growth in India set to remain muted at 7.0% #FinanceIndia #StockMarketNEWS #Business
New Delhi: Even as the Indian economy posts a 8.4 per cent GDP growth in Q2 FY 2021-22, rising above the 7.4 per cent contraction in Q2 FY 2020-21 riding on rapid vaccination drive in the country and improved consumer and business sentiments among other factors, real household spending growth in India is set to remain muted at 7.0 per cent, in 2022, which is lower than the 8.9 per cent growth estimated in 2021.

Lingering effects of the COVID-19 pandemic induced contraction in consumer spending over 2020 created a low base from which the spending in 2021 could grow, a Fitch country industry outlook for India’s consumer and retail sector has forecast. Consumer confidence levels have failed to return to pre-COVID-19 levels, suggesting that consumer spending on big ticket items will likely be deferred until the economic and health situation in the country stabilises, the report says.

The outlook for 2022 points to real household spending in 2022 will build up on its recovery in 2021 as the favourable base effects wear off. This will put real household spending at USD1.0 trillion over 2022, going above the USD 980 billion posted in 2019, the pre-COVID-19 environment. According to Fitch, with India’s economy expected to fully recover in 2021, more conventional growth patterns will return in 2022. Economic growth will be underpinned by consumer spending, easing unemployment, and continued investments in the country’s infrastructure sector, thus creating more jobs.

Highlighting the risks to watch out for over 2022, especially in Q122, the report flags elevated inflation as a dampener in consumer spending. Inflation has been ticking up, reaching a peak of 6.3 per cent year-on-year in June 2021 and then moderating over the remainder of the year, reaching 4.5 per cent year-on-year in October 2021. However, the report projects that inflation will end the year at 5.5 per cent year-on-year, moderating over 2022, reaching 4.5 per cent year-on-year by the end of year. Consumer spending recovery will also be supported by improving COVID-19 vaccination rates, despite India being still far from achieving herd immunity, with the theoretical minimum proportion of fully vaccinated individuals being 85 per cent.

India’s vaccination drive has been tepid, with 55.2 per cent of the population receiving at least one vaccine dose (as of November 22 2021, latest data available). This is below the Asia average of 61.7 per cent.
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