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Moneycontrol Pro Weekender | A festive boost 

There are all tell-tale signs. Consumer demand may be looking up as festive season kicks in, but will that be good enough for growth?

September 10, 2022 / 11:12 AM IST
Representative Image (Source: AP)

Representative Image (Source: AP)

Dear Reader,

The festive season has started. Businesses have high expectations from the season this year, hoping that it will give a much-needed boost to consumption. The season will provide answers to some pressing questions: Is the pick-up in consumption sustainable, or is the current bounce merely due to pent-up demand? Will festive consumption demand extend to the masses, belying the narrative of a K-shaped recovery? Or is the demand from the top third of the population enough to sustain overall demand in the economy?  At the moment, though, all the signs point to demand getting stronger.

Consider employment. The India Composite Purchasing Managers’ Index (PMI) for August showed that private sector jobs expanded at the strongest pace in 14 years during the month. That’s in the formal sector, but the government’s Periodic Labour Force Survey (PLFS) of urban employment for April-June 2022 shows the unemployment rate for persons above 15 years of age at 7.6 percent, compared to 8.8 percent in pre-pandemic April-June 2019, suggesting more jobs have been created even in the informal sector. Even youth unemployment has come down, with the unemployment rate falling to 18.9 percent among 15-29-year-olds, compared to 21.6 percent three years ago. What’s more, the urban labour force participation rate is better than it was in pre-pandemic times.

Rural employment too is getting better, seen from the drop in demand for work under the rural employment guarantee programme, as sowing picked up. In August 2022, 1.6 crore households demanded work under MGNREGA, only a bit higher than the 1.46 crore households that demanded work under the scheme in August 2019, before the pandemic. Clearly, if employment is getting better, consumption demand too should pick up.