On an upbeat note for the sector, consumer sentiments are soaring. Reserve Bank of India (RBI) released the results of March 2024 round of its bi-monthly consumer confidence survey (CCS). The survey collects current perceptions (vis-à-vis a year ago) and one year ahead expectations of households on general economic situation, employment scenario, overall price situation, own income and spending across 19 major cities.

The latest round of the survey was conducted during March 2-11, 2024, covering 6,083 respondents. Female respondents accounted for 50.8 per cent of this sample. Consumer confidence for the current period has been on a path of sustained recovery; respondents assessed improvement in all survey parameters; the current situation index (CSI) rose by 3.4 points to 98.5 – its highest level since mid-2019.

Consumer confidence for the year ahead improved further on the back of higher optimism in all CCS parameters; higher optimism resulted in the future expectations index (FEI) rising further by 2.1 points to 125.2 – also its highest level since mid-2019. Households’ sentiments on general economic situation and employment prospects recorded notable improvements for both the current period as well as the upcoming year; in synchrony, their outlook on discretionary spending improved. Respondents also assessed better income situation compared to a year ago and expected further rise in income in the year ahead.

Consumer Durable Finance Market In Good Shape

According to an update from ResearchAndMarkets.com, titled India Consumer Durable Finance Market, By Region, By Competition Forecast & Opportunities, 2019-2029, the consumer durable finance market in India has witnessed a sizable growth, accelerating from USD 1.21 billion in 2023 to a forecasted value of USD 3.95 billion by the end of 2029. This growth trajectory represents an impressive CAGR of 21.85%. In the light of increasing consumer aspirations, growing purchasing power, and the rising penetration of digital finance solutions, the market continues to demonstrate strong growth potential. Foremost among the factors propelling the market forward are the rising consumer aspirations and enhanced purchasing power, especially among India's burgeoning middle-class demographic. Urbanization, income growth, and rapidly evolving lifestyles also play critical roles in shaping consumer behavior and fueling the demand for high-quality electrical and electronic consumer goods.

Outlook:

Soaring Copper prices could add to the manufacturing cost of a number of white goods if the metal sustains recent gains. COMEX Copper futures have spiked recently and hit near two year high in first week of May 2024. Meanwhile, demand for air-conditioning is likely to be excellent amid scorching heatwave conditions and intense hot weather conditions across the country. The RBI has noted that urban consumption remains strong and rural consumption has recovered. These are promising factors for demand in a sector like consumer durables.

Long term outlook for the sector is also bright given the burgeoning population and massive potential for growth in real estate. The real estate sector is estimated to reach a market size of USD 1.3 trillion by 2034 and USD 5.17 trillion by 2047, according to a report by realtors body CREDAI. The current market size of Indian real estate is Rs 24 lakh crore (around USD 300 billion), split between residential and commercial segments in the ratio of 80 per cent and 20 per cent, respectively, it said in a statement. CREDAI also projected that there will be 7 crore units of additional housing demand by 2030. Reflecting the aspirational growth of Indian homebuyers, over 87.4 per cent of housing demand by 2030 is expected to be of houses costing more than Rs 45 lakh, it noted. 

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