A sustained consumption boom is far from assured yet

livemint.com:

Bank of India (RBI) released data in September that showed how the incremental flows of financial liabilities of Indian households have been rising sharply over the past two years, though it is still not clear whether they borrowed money to support consumption or to buy new homes (which shows up in national statistics as an investment activity). Third, households with a steady income still have some excess savings that were accumulated during the two major covid lockdowns. Financial savings of households had gone up sharply in fiscal year 2020-21, as people were either unable or too worried to spend.

The stock of financial assets held by Indian households as a percentage of gross domestic product (GDP) has been normalizing over the past two years, as these excess savings have been spent on both goods as well as services—or what has often been described as revenge buying. Households usually try to smoothen their consumption despite volatility in income by either borrowing or dipping into their accumulated savings. Some variant of this process is likely to have been in play since the pandemic.

A lot also depends on how confident households are about their earnings in the future. They will be more prepared to either borrow or use their accumulated savings to buy stuff when they are confident that their future earnings growth will be strong enough for them to pay back their loans or rebuild their savings. The broader point is that household balance sheets seem to be leveraging even as the balance sheets of the private corporate sector and the government are deleveraging.