Indians are shopping only for essentials even though economy is reopening

Consumption, which accounts for 60% of the economy, has been the driver of growth during previous stress periods, but a survey shows consumers are no longer confident.

Representational image. Shoppers maintain social distance while standing in a queue at Lake Mall, Kolkata after it reopened | PTI Photo

New Delhi: Businesses in India from car dealers to clothing retail chains are ready for customers as the economy reopens, but shoppers are holding back.

“While the supply situation seems to be nearly normal, so far, purchases are need-based,” analysts at Mumbai-based Anand Rathi Shares and Stock Brokers Ltd. wrote in a note to clients, after speaking to more than 200 distributors, dealers and retailers across the nation.

The government allowed a phased lifting of lockdown restrictions from Monday, allowing shopping malls, restaurants and places of worship to reopen in areas where coronavirus infections are under control. While consumption, which accounts for 60% of the economy, has been the driver of growth during previous stress periods, a central bank survey showed consumers were no longer confident.

Footfalls in stores selling non-essential items were down to 40%-50% of normal, according to the report. Durables saw better-than-expected sales in May due to factors such as work and schooling from home, pent-up demand, and summer heat, but that demand fizzled out in early June, Anand Rathi said.

Automobile factories and dealerships are facing a grim situation, and many dealerships may close down and due to low footfalls and other financial issues, the analysts wrote. “A revival of private spending is the only hope for an economic turnaround,” they said.-Bloomberg