Good news for Indian economy, domestic demand will increase rapidly in 2-3 quarters: UBS report
Rural areas Due to the strong demand, domestic consumption is expected to increase in the next two to three quarters in the country. Swiss brokerage firm UBS Securities made an estimate in a report on Tuesday. According to the report, factors like strong demand in rural areas, softening of inflation and government social expenditure will strengthen domestic consumption. The report says that the crop scenario has improved due to better monsoon and the social expenditure of about $ 20 billion on the benefits of women has strengthened the purchasing power in rural areas. However, the report says that urban consumption seems to be stabilizing. Factors have been described as helpful by changing personal income tax rates by changing personal income tax rates, and better availability of debt of RBI, and better availability of debt.
Products consumption is increasing
Tanvi Gupta Jain, chief economist of UBS India, said, “There are signs of improvement in rural activities but it will be hurry to expect a widespread rise in overall domestic consumption as rural consumption is not even half of total consumption.” According to the report, a ‘distance’ is being seen within rural consumption in which the demand for general consumer goods is weak while consumption of ‘premium’ products is increasing. After adjusting food inflation in the April-June quarter, the actual rural wage growth reached six years high of 4.5 percent. At the same time, the profitability of the agriculture sector has been affected due to the decrease in the prices of food items.
Consumer perception improved
The report says that consumer perception has improved in rural areas. Sale of two -wheelers on quarterly basis has increased by nine percent and tractor sales by 35 percent. Apart from this, the sale of daily consumption items (FMCG) has also been good. At the same time, indicators associated with urban consumption saw some softness during the June quarter. Despite the consumer perception being stable, the sale of passenger vehicles and the production of sustainable consumer goods declined. The report has predicted that under the recommendations of the Eighth Pay Commission for government employees to be implemented from the year 2026, a possible payment of $ 55 billion will accelerate urban demand.
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