Is India's consumption slowdown a blip or structural problem to crack?

livemint.com:

The Indian consumer is showing signs of fatigue. The indications are evident in what consumer goods companies are reporting as well as from hard data in the national income accounts. Household consumer spending grew at half the pace of the overall economy in the financial year that ended in March.

This has wide implications. Several economists have in recent weeks pointed out that companies are unlikely to buy machinery to increase capacity in their existing factories or build new factories at greenfield sites till they are sure of robust demand for their products in the years ahead, either from India or foreign consumers. A recovery in the corporate investment cycle right now depends on better visibility of consumer demand in the future.

Here is a stylised version of what happened to the purchasing power of consumers in recent years. India entered the pandemic with the economy losing momentum over seven quarters in a row. The pandemic hit the economic activity of households in very different ways, but the economy as a whole saw a sharp increase in the forced savings plus precautionary savings of households.

In other words, households saved more either because they had few opportunities during the strict lockdowns or living in the penumbra of uncertainty made them wary of spending. India saw a splendid recovery in consumer spending after the pandemic ended. One reason was that the stock of excess savings that households had built up during the lockdowns provided a significant financial buffer.