Indians spend big on necessity, less on luxury

GOOD NEWS: The 2009 festive season has brought back the cheer among the consumers.

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New Delhi: After a year of slowdown in the Indian economy the consumers are finally getting back to shopping malls. Sales are on an upswing, real estate is recovering and automobile companies have also reported higher sales.

The 2009 festive season seems to have brought back the cheer among the consumers.

Suraj Kumar and his family have been avoiding the showroom window for almost a year now. Today, they have the confidence to walk in and order the TV they have been wanting

"I can now finally buy that LCD as the situation around me has finally stabilised," says Kumar.

After a year of slowdown, the road to recovery is getting stronger. Retail chain Pantaloon has seen a steady upswing in sales. They were negative in December 2008.

Automobile sales rose 20 per cent in July over last year and 24 per cent in August. Rs 3,400 crore worth of auto loans were disbursed by the eight top finance companies in September, the highest in the last two years.

In fact Maruti broke all records for car deliveries in October with 8,000 in a single day.

Real estate has traditionally been an indicator of growth. Property registrations have increased 20-22 per cent in Mumbai, Delhi and Pune between April and June and Prices are up by five-10 per cent.

One fact stands out that the spending is more on necessities and less on luxury.

A survey of 250 families across 16 states conducted by CLSA Asia Pacific show increased spending on education, food and groceries and healthcare and medicine.

On the other hand holiday travel, jewellery and fuel and transport have taken a beating.

The Indian consumer has evolved by adjusting to the changing times so spending on luxury is out but spending on necessity. After the struggle western countries went through, Indians it seems have learned from their examples.