Lifting the economy

The challenge for FM will be to sustain the consumption demand

Festivities ahead of Durga puja and Dussehra have kicked in with style. Soaring sales reported on e-commerce platforms are heartening as they reflect that consumption demand is intact and, further, that economic fundamentals are strong. Four years back one could not have imagined 4.6 million mobile sets worth $ 800 million sold in less than 48 hours in the festive season. Off the shelf sales was not limited to just mobile phones that continue to be a big draw in rural and semi-urban markets. High-end large appliances, fashion products and several other items have been sold in millions of pieces with targeted sales in the week pegged at $5 billion.

Even cars that saw tepid sales in the last few months are firmly on a high growth path. If aggressive sales of automobiles buoyed by deep discounts and foreign trips to London, Paris or US cities by winners are any indication, consumption demand continues to be on the pick up. New automobiles and personal product launches in dozens at virtually every price point reflect consumer confidence that is again driving northward. For a moment, the entry of new automobile players from China and Korea with their own cars momentarily blinds the on-going trade war with US, threat of sanctions on India beginning November 4. Durga puja in the eastern states, Ramlila in the north coupled with Dussehra in the southern states and then Diwali should only offer more opportunities to perk up the sentiment. As expected, e-comm giants Amazon and Flipkart are out to cash in on the festive mood. Even yellow metal consumption during the festival days seems to be robust. Otherwise, how does one explain the spurt in gold prices to Rs 32,120 per ten grams in the last two days? But, the equity market slide over the last few months, shaving off most gains made by investors this fiscal, could be a dampener to festive buying in the western Indian states. High interest rates and inflation inching towards upper threshold set by RBI have till now not impacted the investors’ and consumer sentiment. At least, there is no inkling to this effect, if leading economic indicators are anything to go by. Housing charts, booking and sale of apartments also seem to have picked up in the National Capital Region notwithstanding issues faced by prospective buyers from companies like Unitech, Jaypee and Amrapali. For the moment, price conscious middle class consumers seem to have reconciled to forking out hard cash for petrol and diesel with fuel prices on the rise nearly on a daily basis.

The tricky issue, however, before FM Arun Jaitley will be to sustain the consumption demand after the Dussehra and Diwali. His predecessors had always kept up the market and consumption sentiment through pep talks and private gatherings. Talking up the market may not necessarily be the only way to go forward. But, briefing all stakeholders in the Indian economy on a regular basis and listening to their problems is part of the FM’s job. Follow up on inputs from the markets, industry, services and export communities is at the core of Jaitley’s corner office operations.