Economic slump: Busting official myths on consumer preferences -Ranjini Basu
Data confirms an acute demand crisis in rural India and beyond.
Finance Minister Nirmala Sitharaman’s latest statement on millennials contributing to the auto industry slowdown by shifting their preferences—choosing Ola or Uber ride-booking services instead of buying cars—is feeding many a meme on social media.
Even before her statement, sections of industry and the banking sector had been pushing this argument. Not just private banking giants, such as Uday Kotak, but even public sector banks are toeing the same line as the Finance Minister.
The largest public-sector lender, State Bank of India, said in its weekly bulletin, Ecowrap, published on August 27, in the context of the fast-moving consumer goods (FMCG) sector that the slowdown could be related to a “change in preferences of customers towards more healthy options of biscuits and snacks”.
Such reasoning is an attempt to take attention away from the deep-seated demand crisis that our domestic economy is swathed in. A closer look at the data on consumption patterns of rural India leaves no scope to keep our eyes closed as a structural crisis takes its toll on a very wide section of the country’s economy.
One key indicator of rural consumption—and, therefore, economic conditions in rural India—is the sale of two-wheelers. Unlike in urban India, people in rural areas have no access to Olas and Ubers. According to Census 2011, of all households that own a two-wheeler, 46% reside in rural parts of the country, as opposed to only 33% of car owners.
The Society of Indian Automobile Manufacturers (SIAM), an auto industry lobby group, recently said that sales of two-wheelers declined 14.85% between April and August this year. The fall was even higher in the case of scooter sales (17.01%) and mopeds (20.39%). Scooters and mopeds happen to be the most preferred vehicular asset in the countryside.
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