Mumbai: The COVID-19 pandemic and the lockdown have made Indian consumers risk-averse if one were to go by data showing a growth in deposits and retail credit plummeting to its lowest level since 2008, economists at SBI said.
On the deposit growth front, it has been a mixed bag, but the extension of the lockdown for a fifth time will ensure that the savings continue to surge, the economists said in a note.
Consumer confidence is a deeply-cherished aspect by policy makers because it is the primary driver of growth in the Indian economy for many years now. Even during the COVID-19 pandemic, there has been a lot of commentary about the need to revive confidence and consumer demand.
Retail credit declined by 2.5 per cent, the lowest level since 2008, from when the data series started, it said, expecting that the decline will continue as Maharashtra has extended the lockdown till 30 June.
The increase in cash credit during the fourth lockdown is more than Rs 52,000 crore, the economists said, pointing out that this can be because of accrued interests in moratorium turning into loans. On the deposits front, there was a surge of Rs 4.83 lakh crore during the first lockdown and Rs 3.62 lakh crore in the second lockdown, which is indicative of “significant risk aversion in consumer spending,” the note said.