Directions in household consumption

There are at present two diverging narratives about Indian household consumption.

- RAMA BIJAPURKAR

Stock market analysts, especially mutual funds, propagate the narrative of unstoppable, runaway, world-beating consumption growth. They project that the demographics, living conditions, and income-growth parameters that have driven stellar aggregate consumption growth between 2010 and 2025 (which is true) will continue to improve steadily (cannot argue, but the devil is in the detail).

In another narrative, since 2024 main street watchers have been flagging slower consumption growth. The factors are private final consumption expenditure growing slower than gross domestic product, a weak job environment, welfare-fuelled consumption, stagnant middle-class wages causing decline in spending, and incomes growing slower than prices. Reinforcing this are the disappointing results for the fourth quarter and full year of FY25 of large FMCG (fast-moving consumer goods) companies that address the full breadth of Consumer India, such as ITC, Hindustan Unilever, Nestle, and Colgate-Palmolive.