Fragile Household Demand: India's Economic Balancing Act
Household demand in India shows tentative improvement, driven largely by disinflation rather than income growth, according to Systematix Research. High debts and weak incomes persist as barriers, with meaningful recovery anticipated by FY26. Rural markets see slight gains, but urban areas remain weighed down by poor job conditions and high prices.
In a recent report by Systematix Research, the fragile state of household demand in India is underscored by high levels of debt and weak income, which pose significant challenges to economic recovery.
Although some signs of improvement are emerging, with rural purchasing power recovering modestly due to disinflation, stagnant incomes continue to constrain substantial growth. Consumer sentiment in urban areas is particularly low, affected by poor job conditions and high prices, and fiscal consolidation by the government further limits consumption.
The report suggests that any meaningful recovery in demand is more likely in the latter half of FY26. Sectoral trends indicate slight growth in passenger vehicle sales, while two-wheeler sales and consumer durables show a decline, pointing to reduced discretionary spending. Bank lending slows with signs of financial stress among households, except for a rise in loans against jewellery. This recovery is largely driven by disinflation rather than actual income increases, leading to questions about its sustainability.
(With inputs from agencies.)
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