Indian consumer spending to return to growth in '21: Fitch

03 Dec '20

1 min read

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Following a pandemic-led contraction in consumer spending this year in India, household spending will return to growth in 2021, expanding by as much as 6.6 per cent, according to Fitch Solutions, which recently forecast consumer spending has contracted by 12.6 per cent in 2020. It projected a return to pre-COVID-19 levels only over the second half of 2021 and 2022.

“While growth will return to positive in 2021, we do note the recovery will be slower than most countries, as a result of the significant contraction over 2020,” it said.

“Unemployment will remain heightened, while the effectiveness of government support measures is questionable,” it said.

In nominal terms, total household spending will only be 1.2 per cent higher than what it was in 2019 (₹123 lakh crore in 2021, compared to ₹121.6 lakh crore in 2019), indicating the extent of the impact that the pandemic has had on consumer spending.

Fitch Solutions said the main categories will return to growth in 2021. However, the economic impact of 2020 had created a significant base effect.

Fibre2Fashion News Desk (DS)

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