India’s Covid curve looks like a rollercoaster. The first wave of infections peaked in September 2020, the second peaked four times higher in May 2021, and the third wave had a similar but smaller uptick in early 2022, the only one we saw this summer. The hump was lighter in comparison. In fact, it is tempting to describe it as the last gasp of the pandemic, a sign it is finally endemic – like any other viral disease, with a low and flat rate of cases. The intelligence of the crowd may be fine this time as well, since the third wave has stopped, people are going out with enthusiasm. Take the retail and entertainment footfall. Pushed off a cliff by the lockdown, they were at one point about 90% below their pre-pandemic levels, before going back to that mark until last autumn. This year, not only have the footfalls been more bullish than tentative in the first half of 2022-23, October has seen such a sharp increase in the count so far that we are already above our pre-Covid baseline. After all, while the virus may still be lurking around, this is our first real post-pandemic festive season. A celebratory air is only to be expected, and that too, with a heady dash of passion.
Should we also expect a big ‘relief’ jump in consumption by the people? Tales of ‘Revenge’, especially on holidays and leisure experiences, have increased in abundance. We also have snapshots of enthusiastic purchases being made in various market segments that address relatively affluent customers. For example, fancy eateries and hotels are bustling, and sales are growing rapidly in the upper reaches of our market for passenger vehicles, with factory dispatches hitting a new quarterly high on the back of strong demand (even though itself aided by a) Chip-Crunch Uncoil) in the three months ending September. The figures for e-way bills generated from freight also indicate a GST collection bonanza this month. Commercial activity is apparently buzzing again. Still, this season’s spending boom needs to mimic the typical festive pattern each year. Could it, perhaps, take a historical volatility ratio? As a hopeful, the latter case draws on the example of America’s ‘roaring 20s’ a century ago, when a sigh of collective relief after the flu nightmare led to a nearly decade-long binge of living it. Cultural historians have traced many aspects of today’s global culture to those who spend this phase of melting abstinence in the West. However, its chances of playing in India may well be confined to a thin layer.
For a broad-based consumption boom, which will attract large chunks of private investment, our economy needs to sustain growth of over 7% in times of pandemic, the outlook is unclear. Blame the divergence of fortunes, as reflected in the country’s recent break-up of vehicle sales. While well-run vehicles performed very well, moderately priced vehicles lagged behind. It is not business as usual, but in line with a K-shaped recovery: Rising prices enriched asset-portfolio owners but squeezed most Indian households, even as corporate profits likely outweighed overall wages. became more. All this reduces the chances of a permanent boom in popular spending. Household financial savings, which rose in 2020-21, were below their pre-Covid plateau by the end of last year, and we can hardly count on further reduction of these. With the reversal of global easy-money policies, the ‘wealth effect’ of stock enrichment has also weakened. In general, for India’s consumption trends to remain strong, incomes must expand.
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