About 1,400 km away, Vikram, a driver in Delhi, had spent his lockdown days in anxiety. Confined to a two-room flat that houses his family of five, he did not have the luxury to develop new hobbies. He had to make sure he had a job when the lockdown was lifted.
Like Dhawan, Vikram (who goes by his first name) hoped to make a purchase — an air conditioner to escape the blistering Delhi heat. But while Dhawan was successful, Vikram was not. Dhawan’s current problems stem from a supply-demand mismatch.
What has stopped Vikram is low and uncertain income. When the lockdown forced people indoors, those with white-collar jobs ended up with forced savings while many in the informal sector lost their jobs. Some economists said the post Covid economic recovery was K-shaped with the rich getting richer and the poor poorer.
However, now, industry executives and economists say the rural slowdown has probably bottomed out and recovery will start getting more even from here. “Things are much more stable now compared with when the pandemic began,” says Vikram, who had enough savings to buy the air conditioner earlier this year but deferred it as the summer was short-lived. However, inflation was high for most of FY2023.
This means the earnings of low-income families —those in rural areas as well as minimum wage earners in urban areas — have broadly been stagnant. But a moderation in inflation, apart from factors such as increased government spend and a rise in incomes, is expected to aid consumer sentiment and, in turn, spending. This is good news for consumer and automotive companies that are betting on low-income households like Vikram’s, who had cut back on their purchases, to bring back demand this year.
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