Shoppers are back, outlook positive

Assured of their buying power, consumers are purchasing appliances such as LCDs, refrigerators, washing machines and microwaves. Purva Mehra reports.

On Dhanteras, Umesh Mehrotra earned brownie points as a dad as he bought his 17-year-old daughter, a very belated birthday gift, a Blackberry.

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On April 4, her birthday, Ayesha Mehrotra had to settle for a more modest birthday present, as her father didn't think the time right to invest in the high-end gadget. “Diwali is a good time to buy. The market was volatile until a few months ago, so I delayed the purchase,” Mehrotra explained.

Mehrotra’s decision is indicative of an increase in the demand for consumer durables, a sign of an improving economy.

The new figures of the index of industrial production (IIP) are heartening evidence of this revival. Between August 2008 and August 2009 the IIP grew to 10.4 per cent, compared with a 1.7 per cent growth between August 2007 and August 2008. Sales of consumer goods — which comprise 28.7 per cent of IIP — grew by 8.5 per cent, up by two percentage points from last year.

“The downturn did not have a crippling impact on the consumer durables segment. Two trends were observed during the slowdown: people either did not invest in high-end products or scaled down budgets,” said Vijay Sales founder Nilesh Gupta, who is expecting a 30 per cent sales growth this year.

Festivities aren’t the sole drivers of this optimism. Economist Ajit Ranade says consecutive months of strong IIP data confirm industrial revival.

Assured of their buying power, consumers are purchasing appliances such as LCDs, refrigerators, washing machines and microwaves. “People usually invest or upgrade big appliances after monsoon and before Diwali, so figures close to Diwali are always promising,” said Ajit Joshi, CEO of Infiniti Retail.