Spending signals

Indian corporations will no doubt be happy with the findings of the latest A CNielsen Asia Pacific Consumer Confidence study, published in The Strategist last Tuesday, which shows that 89 per cent of Indian consumers in the survey think the economy will improve over the next 12 months.

India, in fact, recorded the highest degree of confidence in its economy. Corporations must be even more heartened by the fact that the appetite for spending is also strong "" it's marginally stronger in India than the regional average.

The caveat to this is that the proclivities for saving and reducing debt are much higher than the regional average, but this should not detract from the spending impulse in a major way; India has the fifth highest number of respondents, from the sample of 13 countries in this survey, who say they will spend more.

At last, it appears, consumer demand could be picking up enough to perhaps provide a more sturdy basis for the feel-good factor of the last few months.

If you consider the data on what consumers plan to spend on, India outperforms the regional average for spends on home improvement, new technologies, short holidays and new clothes, all of which augurs well for services, consumer electronics and textile sectors, as well as for such heavy-duty industries as construction and paints.

There are, however, several other facets of the survey that suggest sources of worry for corporations and planners. The numbers on how Indians plan to reduce debt is a case in point.

Although India again ranks fifth in terms of the number of people opting for debt reduction, the disaggregate numbers suggest future problems.

Indian consumers outperform the regional average on only one issue: paying off personal loans. But in terms of paying off credit card payments and reducing housing loan repayments, they lag behind the regional average "" in the first case the lag is by as much as six percentage points.

This could be a point well worth noting for credit card and housing loan companies that are feverishly competing to expand their retail base by doling out their products at rock-bottom rates "" or free, in the case of credit card rates.

In terms of savings, a significantly higher proportion of Indians say they will also be putting their money in stocks, which could be a cause for concern, given the current volatility in the markets.

There is no doubt too, that the energetic restructuring that has taken place in corporate India over the past decade has taken its toll on consumer confidence.

In the section on what consumers in the region are worrying about, Indians cited job security as their major concern in contrast to other countries in Asia-Pacific where health "" no doubt as a result of SARS "" is the dominant concern.

The big surprise from the survey is that for all that, Indians "" as do other consumers in the region "" see globalisation as an opportunity rather than a threat. Politicians who will be going to the hustings in three months should take note.