India’s festival season may boost consumer demand

India’s upcoming festive season raises hopes for consumer demand picking up, rating agency ICRA said in a note, while noting the “unconvincing” performance of high frequency indicators so far this month.

“It appears that the temporary boost, provided by the easing of state-wise restrictions after the second wave of Covid-19 ebbed, petered out,” said Aditi Nayar, chief economist at ICRA, the Indian unit of Moody’s Investors Service.

“While the early trends for September 2021 are unconvincing, we are cautiously optimistic that rising confidence will amplify demand during the festive season.”

Big ticket purchases like automobiles, electronics and even real estate tend to pick up pace during the festive season, which begins in October, but concerns over a potential third wave of coronavirus infections has kept consumer sentiment subdued.

Relative to the pre-pandemic levels, diesel consumption, two-wheeler output, vehicle registrations and domestic passenger traffic recorded lower volumes in August 2021, ICRA said.