UBS Report Predicts Low Household Spending in India for FY25

UBS Report Predicts Low Household Spending in India for FY25
UBS Report Predicts Low Household Spending in India for FY25
UBS Report Predicts Low Household Spending in India for FY25
UBS Report Predicts Low Household Spending in India for FY25

UBS Report Predicts Low Household Spending in India for FY25

UBS Report Predicts Low Household Spending in India for FY25

UBS Report Predicts Low Household Spending in India for FY25

Key Highlights:

  1. UBS report forecasts a modest 4-5% growth in household spending for the next fiscal year, significantly lower than previous years.
  2. Factors contributing to subdued spending include stagnant urban wages, cautious lending by banks, and reduced borrowing for non-housing purposes.
  3. Despite overall low spending, wealthier individuals are expected to maintain their consumption patterns, while rural spending may increase, buoyed by predictions of an above-normal monsoon.

The ‘India Economic Perspectives’ report by UBS indicates a subdued outlook for household spending in the upcoming fiscal year FY25. With a projected growth rate of only 4-5%, significantly lower than the robust 6.5-7% witnessed in previous years, several factors contribute to this subdued forecast.

Stagnant urban wages, cautious lending practices by banks, and reduced borrowing for non-housing purposes are cited as reasons behind the anticipated low spending. However, the report suggests that affluent individuals are likely to maintain their consumption levels, while rural spending could see a slight uptick, particularly if farming production increases due to a predicted above-normal monsoon.

The recent decline in India’s net financial saving of households, as highlighted in the National Accounts Statistics 2024, indicates a worrying trend. With household savings decreasing, there’s less cash injected into the economy through spending, potentially dampening economic growth. As a result, the road ahead for India’s economy may face challenges amidst sluggish household spending.

Source: ANI

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