Indians have shrugged off the pandemic blues and are buying on credit like never before.
Bank loans to purchase consumer durables like televisions, laptops and refrigerators jumped as much as 60% in FY22 compared with a 21% decline in the preceding fiscal, as consumer confidence recovered and economic activity revived to pre-pandemic levels.
In addition, consumers who have been hit by the pandemic are preferring to buy on easy instalments rather than pay the entire amount upfront.
Spending on credit cards surged at a faster pace of 13% against an 8% growth in FY21, the Reserve Bank of India data showed. “Last year, the demand for consumer goods and discretionary spending bounced back as life normalised. Activities like marriages and travel that drive demand for personal loans were back.
The return of wage inflation and job creation also contributed to it,” said Ambuj Chandna, president, consumer assets at NSE 1.53 % . Credit card outstanding stood at 1.48 lakh crore while consumer loans at 27,618 crore at the end of March 2022. Vehicle loans also grew by 9% last fiscal to 3.3 lakh crore. All these numbers were higher than pre-pandemic levels. ‘Boostto Sales of Premium Products’ Banks, manufacturers and retailers said the upswing is due to improved economic activity and consumer sentiment last year after the second wave as well as wider penetration of such finance options to the smaller stores and towns.
“The rebound in domestic economic activity is gradually getting generalised. Improving contact-intensive services amidst revival in urban demand is driving personal consumption,” RBI governor Shaktikanta Das had said in the recently held monetary policy committee meeting Industry executives said consumer finance schemes – both no-cost and low-cost equated monthly instalments (EMIs) – have made deeper penetration in the last few months with consumers preferring to buy on easy instalments rather than shelling out large sums from their pocket at one go due to the stress on personal finances during the pandemic. Consumer electronics company Haier India president Satish NS said almost 65-70% of all electronic purchases have been made on finance. “It is growing exponentially and even consumers who used to buy on cash are now buying on finance and parking rest of the money in other investment avenues. All brands are focusing on it since it helps them to drive sales of premium products even though it’s a hit since the interest component is borne by us,” he said.
The Economic Times