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HomeEconomyHair oil to bikes — Indians are cutting down on spending ⁠&...

Hair oil to bikes — Indians are cutting down on spending ⁠& that’s not the real problem

The drop in sales is indicative of the economic slowdown becoming more entrenched, and will add pressure on policymakers to ease fiscal & monetary policy.

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Indians are cutting back on spending from hair oils to motorcycles in a fresh sign that the slowdown in Asia’s third-largest economy is becoming more entrenched.

That is likely to add pressure on policymakers to ease both fiscal and monetary policy in the coming months at a time when Finance Minister Nirmala Sitharaman tours the country to meet various stakeholders and lobby groups. The Reserve Bank of India has lowered interest rates to a nine-year low, but that impact is yet to be felt due to tardy monetary policy transmission and subdued demand for loans.

On Friday, Hero MotoCorp Ltd., the country’s largest two-wheeler maker, said it had shut its manufacturing facility for three days until Aug. 18 in response partly to “the market demand scenario” and inventory management. The same day, Sundaram-Clayton Ltd., an auto parts supplier, said it will shut its factory in Padi in the southern Indian state of Tamil Nadu for two days until Aug. 17, citing “business slowdown across sectors.”


Also read: Car sales in India drop to record low as economic slowdown worsens


Mirroring the sentiment about weak consumption, Emami Ltd., a cosmetics to healthcare conglomerate, said that the company was witnessing lower demand for its hair care products.

“We are doing some cost optimization,” Priti A. Sureka, a director at Emami said in an interview in Kolkata.

Earlier this month, the company reported earnings that missed estimates as revenues took a hit, highlighting similar struggles among consumer good makers including Hindustan Unilever Ltd. and Britannia Industries Ltd. This does not bode well for India’s overall growth rate, which has been hit by slowing public spending and a cutback in private consumption.

Official gross domestic numbers for the June quarter are due Aug. 30 and analysts forecast the economy to have expanded 6.1% from a year ago, which is higher than the five-year low of 5.8% seen in the January to March quarter, but well below the 7-8% pace seen in the past few years.

A shadow-banking crisis for the past one year has weighed on private consumption which contributes nearly 60% to the GDP. The latest consumer sentiment survey from the central bank highlighted worries about job losses with a subdued economy keeping many from spending. – Bloomberg


Also read: Financial sector needs bold reform to fix slowdown. Modi govt has time & numbers to do it


 

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1 COMMENT

  1. Ideology se subcontinental economy nahin chalti. A lightly populated land – although Saudis have been breeding prolifically, starting with the Royal Family – blessed with abundant oil can export Wahabbi ideology and live on spirituality. Not India. Stuff the education sector with the faithful and kiss goodbye to what remains of the demographic dividend. All these steeped in the past ideas are not the raw material of success in a globalised world. Things are coming to a head now on the economy. The wise would move the pendulum back from the religious to the material.

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