Festive demand is picking up, much to the relief of the country’s policymakers. After a lull in spending in the first two quarters of the current financial year, consumer footfall is beginning to pick up amid slowing of new coronavirus cases. However, an increase in consumer inflation to 7.34 per cent in September from 6.69 per cent in August reflected supply-side constraints as well, which need to be addressed at the earliest, analysts said.
“Festive demand will pick up. Demand-side pull seems to be adequate but we need to address the supply side too which is linked to full exit of the lockdown,” D.K. Srivastava, chief economic adviser, EY, told IndiaNarrative.com. he pointed out that another dose of demand-side stimulus may be required in the fourth quarter.
The Bharatiya Janata Party’s spokesperson on economic affairs Gopal Krishna Agarwal said that the government was ready to take steps to address bottlenecks in the economy. “Economic activities are opening up, people are keen and enthused to return to work. While the economy has contracted, with growth this year expected to be in the negative zone, all reports suggest that India will bounce back next year and recovery will be strong,” Agarwal said.
While the International Monetary Fund (IMF) projected a 10.3 per cent contraction for the Indian economy in 2020-21, it said that economic growth next year would be 8.8 per cent.
Though Srivastava noted that the real recovery will start from the fourth quarter, Agarwal said that the process of economic revival is already underway.
“Demand is picking up and importantly the industry is happy with the reform measures that have been put in place. Stimulus packages are temporary but the reform measures will go a long way in boosting the economy,” he said.
India’s economic growth in the first quarter contracted by 23.9 per cent.
Analysts said that the country could return to a positive growth zone in second half of the year, the October-March period.
The Confederation of All India Traders (Cait) said that Finance Minister Nirmala Sitharaman’s recent steps to infuse money in the hands of the people will help in increasing consumption.
“In the first five to six months, consumers have refrained from spending, so there is a pent-up demand building up in the system and we are hopeful that consumption will pick up in the coming days,” Praveen Khandelwal, secretary general, Cait said.