A key risk is resurgence of community transmission and consumers delay purchases to reduce health risks
A key risk is resurgence of community transmission and consumers delay purchases to reduce health risks

Cautious but optimistic outlook in India consumer spending: Fitch

ANI | Updated: Jun 08, 2021 11:23 IST


Singapore, June 8 (ANI): Fitch Solutions on Tuesday held an optimistic outlook for the Indian consumer over 2021 with real growth in household spending forecast at 9.1 per cent year-on-year.
This marks the start of a recovery from the negative 9.3 per cent year-on-year contraction over 2020.
However, despite the projected growth in 2021, Fitch said the real value of total household spending will remain below pre-Covid-19 levels (2019) with real household spending forecast to reach a total of Rs 73.3 lakh crore in 2021 compared to Rs 74 lakh crore in 2019.
"This indicates that the recovery of consumer and retail sector in India will spill over into 2022."
Households' disposable income this year will grow to Rs 416,400 and surpass pre-Covid-19 levels of Rs 408,800 which will help support domestic demand.

However, inflationary pressures may weigh down on spending which will average at 5 per cent in 2021, outpacing income growth.
As such, the Indian consumer will remain under pressure over 2021 and so spending growth is stemming from a lower base.
"While new daily Covid-19 cases are declining and authorities are looking to relax restrictions, we hold a cautious but optimistic outlook that consumer spending will start to build up in H221."
Fitch said no nationwide lockdown was imposed but 35 of 36 states and union territories had some form of restrictions this month amid the second wave of outbreak.
The country started its vaccination drive on January 16 and has administered 16.4 vaccine doses per 100 people as of June 5, higher than regional peers Bangladesh and Sri Lanka which have administered 6.1 and 10.6 doses per 100 people respectively.
Fitch said a key risk to its India outlook is a resurgence of community transmission, particularly if lockdowns are reintroduced nationwide and consumers delay purchases to reduce health risks, which will weigh heavily on consumer spending recovery. (ANI)

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