STRONG HOUSEHOLD SPENDING TO SPUR INDIA'S RISE TO 3RD LARGEST CONSUMER MARKET

India’s consumer spending over 2024 demonstrates a positive outlook, offering stable growth as consumer confidence recovers beyond pre-covid levels, buoyed by recovery in the wider Indian economy and suggesting that consumer spending on big-ticket items will be more likely. However, sticky inflation and elevated unemployment stay as downside, as per an outlook for India’s consumer sector by Fitch Solutions company, BMI.

- NIVEDITA MUKHERJEE

Household spending in India will post strong growth over 2024, with real household spending growing 6.7 per cent y-o-y over the year, a slight uptick from the 6.5 per cent y-o-y growth estimated for 2023. This growth in consumer spending over 2024 will come as the wider Indian economy recovers and growth figures return to a more stable medium-term trajectory. This is supported

by growing domestic demand as well as the expected recovery of wider international tourism. Although inflationary pressures have remained elevated across 2024, inflation is moderating and strong showings in real income growth for Indian consumers will give greater propensity for household spending growth, projects BMI.

In 2020, consumer confidence in India took a hit and fell to a five-year low of 49.9 (September 2020) for the current situation index (CSI) and 97.9 (May 2020) for future expectations index (FEI). Poor consumer demand has impacted credit growth, as consumers postponed their non-essential spending. While both these indices remain relatively weak, they have been on a recovering trajectory across 2023. Crucially, both indicators are above their 2019 levels for the first time since the pandemic, suggesting that consumer spending on big-ticket items will be more likely.