CONSUMPTION GETS A BHARAT BOOST

FROM ELECTRONIC PRODUCTS, FURNITURE AND CARS TO APPAREL, FASHION ACCESSORIES AND FOOD, SMALLER TOWNS ARE OUTPACING METROS AND BIG CITIES IN CONSUMPTION REVIVAL. WILL THIS SUSTAIN?

- AJITA SHASHIDHAR

Ramesh Iyer, Managing Director, Mahindra Finance, was pleasantly surprised to know that his team had disbursed 30,000 vehicle loans in June, a huge increase from April and May when business was almost zero. “We have opened 1,100 rural branches and there are footfalls and enquiries about tractor and car loans like before,” says Iyer, admitting that some part of this could be pent-up demand also. “Through April and May, customers took advantage of the loan moratorium, but now they are beginning to pay up. They are requesting us to bring down the instalment amount. Can you give us a ₹8,000 /10,000 per month EMI instead of ₹12,000 is what they are asking for.” Besides, there is also demand for additional short-term loans. “They had borrowed money during the lockdown. Now they are asking for short-term loans, which they are confident of paying back within the next 6-12 months along with the main loan. People are cautious, but they have certainly not lost hope,” adds Iyer.

The Rebound

At a time when GDP for FY21 is estimated to shrink, and the Nielsen consumer confidence index at 123 points is 15 points lower than 2019, Iyer sounds a bit too optimistic. Add to this the job losses and salary cuts across sectors, and there’s little to cheer about.

Here perhaps banking on a silver lining, though most consumer goods companies, auto as well as other sectors saw either muted or negative growth in first quarter of FY21, rural and semi-urban (Tier-II, III, IV) markets bucked the trend. A recent Nielsen report says rural FMCG sales grew at three times the pace of urban India sales in June.