After nearly one-and-a-half years of Covid-19 induced demand slowdown, India is now witnessing a cautious return to “business as usual”, according to a Deloitte consultancy report.
The nation is witnessing a consumption revival with spending shifting toward more discretionary rather than essential items. The fall in Covid-19 cases as well as an uptick in vaccinations have brought a new wave of confidence among Indian consumers, said Deloitte’s Global State of Consumer Tracker.
The Indian consumer is “ready to spend more on discretionary items, feels safe about returning to the workplace, wants to spend on travel,” the report said. “Reduced anxiety, coupled with several countries lifting travel restrictions for India, the Indian consumer is all set for international travel,” it added.
That revived spending is expected to accelerate with the festive season approaching and a decline in active Covid-19 cases.
A 30-day analysis of consumer spending behavior of 1,000 people in India during July-August shows higher spending on electronics, clothing, footwear, alcohol, and dining out.
Around 57% of Indians surveyed said they were planning international travel for leisure in the next three months and 59% feel taking a flight was safe. Moreover, 57% of respondents said they feel safe staying in a hotel.
At the same time, despite increased confidence, health remains a concern, with 76% of survey respondents concerned about their physical well-being, and 79% concerned about the health of their family.
Financial institutions are leveraging into the upswing in consumer sentiment. India’s largest private lender, HDFC Bank, has said it plans to double the loans it makes to retail borrowers over the next few years.
Out of a total 11.5 trillion rupee (US$ 156 billion) loan book, retail borrowing is worth 3.7 trillion rupees and is expected to reach 8 trillion rupees in the next two years, HDFC said. A year ago, the lender reined in its retail lending to protect asset quality as Covid-19 caused business closures and widespread job losses.
Real estate developers also expect a boost in housing sales this festive season, as several leading banks and mortgage lenders have reduced interest rates to woo new customers.
The October-December holiday period usually sees a surge in housing sales across cities as homebuyers prefer to book and buy properties during festivals such as Diwali and Dusshera.