However, the broad undertone in demand is steady given the consistent recovery in the economy and focus on long term infrastructure development. Another supportive factor is rising incomes. The Union Cabinet on 24 March 2023 has given its approval to release an additional installment of dearness allowance to central governments employees and dearness relief to pensioners with effect from 1 January 2023. The additional installment will represent an increase of 4%, taking the total to 42% of the basic pay for central government employees and pensioners to compensate against price rise. The combine impact on the exchequer on account of both dearness allowance and dearness relief would be Rs 12,815.60 crore per annum.

This will benefit about 47.58 lakh central governments employees and 69.76 lakh pensioners. This increase is in accordance with the accepted formula which is based on the recommendations of the 7th Central Pay Commission. Indian consumers showed increasing optimism about the general economic conditions and household income, according to a survey conducted by the Reserve Bank of India in January.

India's air conditioner market recorded CAGR of more than 9% for 2016-2021

According to a latest update from Researchandmarkets, titled India Air Conditioner Market Overview: 2027-28 the Air-Conditioning or AC market in India have been adversely impacted by the Covid-19 pandemic and lockdowns. However, due to pandemic situation, it is anticipated that the 2020-21 year would be a challenging year for the air conditioning industry as various firms would be airlifting component such as compressors, motor driven fans and other ac elements from foreign countries.

The air conditioner market grew with CAGR of more than 9% for 2016-2021, registering more than INR 26000 Crore in 2021-22. The ac business in India remains steadfastly committed to customer satisfaction and innovation and has launched the new enhanced version of the Inverter AC. The launch of new technology air conditioner offering superior quality products those are both affordable and accessible. In India, AC penetration is still hovering around 8% compared to the 90% in developed countries. This provides a huge potential for market players to grow and sustain their industry leadership position. Further, rise in the average temperature of the Indian subcontinent which also translates to higher demand for ACs in the country.

Outlook:

Shaktikanta Das, the Reserve Bank of India Governor has stated in his monetary policy assessment that headline inflation is projected to moderate in 2023-24. The monetary policy actions taken since May 2022 are still working through the system. Accordingly, the MPC decided to keep the policy rate unchanged to assess the progress made so far, while closely monitoring the evolving inflation outlook. Looking ahead, the higher rabi production has brightened the prospects for agriculture sector and rural demand. The steady growth in contact-intensive services should be positive for urban demand. The government's focus on capital expenditure, capacity utilisation above long-period average and moderating commodity prices should bolster manufacturing and investment activity. These are supportive factors for consumption demand of durable items in next few months.

Meanwhile, the continued recovery in housing market is also a critical factor for demand of appliances. In this year's Union Budget, the outlay for PMAY has been enhanced by 66 per cent to over Rs 79,000 crore. This will likely benefit the end-user demand for affordable homes. NAREDCO has noted that the enhanced outlay is expected to address more than 55 per cent of the estimated deficit in funds for projects under the scheme, giving a huge impetus in providing homes to those in need and bridging the gap between those without access to proper dwellings and those who do.