AgenciesDiscretionary consumption demand may take a hit in India due to job losses and falling income levels, according to a survey conducted by BofA Securities.
The survey highlighted that Covid-19 outbreak is fast progressing from a supply shock to a demand shock. “Only 16 per cent of people reported that they saw no change in income or employment since the lockdown, while 19 per cent have lost their jobs. This, in turn, is leading to the postponement of discretionary consumption demand,” BofA Securities said.
Out of 1,001 respondents who participated in the survey, 53.50 per cent have delayed their jewellery purchases. It was followed by TVs, washing machines, fridges, ACs (47 per cent), 2-wheelers (40 per cent), cars (37.6 per cent) and painting homes (30 per cent). Besides, 33.7 per cent of respondents are also delaying house purchases.
The global firm although believes that the worst may be over. However, its BofA India Activity Indicator is pointing to further GDP contraction.
“We see 7.5 per cent FY21 GDP contraction assuming that the current restrictions are removed by November with the re-start taking till mid-January,” BofA Securities said adding credit offtake since unlock 1 has declined by Rs 8,500 crore from over Rs 61,100 last year.
BofA Securities also expects that the RBI’s monetary policy committee (MPC) may cut interest rates by 15 basis points on October 1 and 75 basis points by March with inflation peaking off.
The survey highlighted that Covid-19 outbreak is fast progressing from a supply shock to a demand shock. “Only 16 per cent of people reported that they saw no change in income or employment since the lockdown, while 19 per cent have lost their jobs. This, in turn, is leading to the postponement of discretionary consumption demand,” BofA Securities said.
Out of 1,001 respondents who participated in the survey, 53.50 per cent have delayed their jewellery purchases. It was followed by TVs, washing machines, fridges, ACs (47 per cent), 2-wheelers (40 per cent), cars (37.6 per cent) and painting homes (30 per cent). Besides, 33.7 per cent of respondents are also delaying house purchases.
The global firm although believes that the worst may be over. However, its BofA India Activity Indicator is pointing to further GDP contraction.
“We see 7.5 per cent FY21 GDP contraction assuming that the current restrictions are removed by November with the re-start taking till mid-January,” BofA Securities said adding credit offtake since unlock 1 has declined by Rs 8,500 crore from over Rs 61,100 last year.
BofA Securities also expects that the RBI’s monetary policy committee (MPC) may cut interest rates by 15 basis points on October 1 and 75 basis points by March with inflation peaking off.