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A steady growth in consumption expenditure, driven by pent-up demand and accumulated household savings, will be one of the primary drivers of India’s GDP growth, said Bhaskar Bhat, Director, Tata Sons Ltd.
“According to Tata view, India’s GDP is expected to grow at 8.8 per cent, which is one of the highest in the world. That is going to be driven by consumption and thereafter there will be a cycle of capex investments from industries after they cover their capacity utilisation shortfall, which is in the order of 35 percent on an average,” Bhat said.
He was delivering the keynote address at the plenary session of the Madras Management Association (MMA’s) Annual convention 2022.
The theme of the convention was ‘Betting on the future : How India can make this decade its own’. The event was powered by The Hindu BusinessLine.
Growth in consumer expenditure
“Consumption is going to be very steady and positive due to continuous growth in consumer expenditure on account of accumulated household savings in the last two years, performance of the rural sector and vaccination of over 700 million people across the country,” Bhat said.
He also added that the government’s response to the Covid-19 pandemic and calibrated opening up of the economy has also increased consumer confidence.
“High physical touch sectors like restaurant, retailing, travel, which were significantly impacted are going to come back with a bang. We are already witnessing it in some of our companies and it will only improve further,” he added.
The Tata Sons Director also said that the online and digital proliferation has proved that big ideas and investment are needed in offering convenience and comfort to consumers at a reduced transactional cost.
“Be it FMCG, Airlines, consumer goods or Fintech, the opportunities for transformation, change and improved consumer experience is only going to get better and better,” Bhat added.
‘Experience Economy’
He also noted that the ‘experience economy’ is attracting investments big time globally since people are even willing to pay multiple times the price of a product for the experience of acquiring that product.
“In India, the experience economy is going to witness the kind of growth that we have not seen so far. For instance, the big fat Indian weddings, where billions of dollars were flowing, were on a back foot in the last two years and now it is going to explode,” Bhat added.
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