Car sales in November rose at their fastest annualized rate in four years, another sign that consumer spending is picking up after a year.
The lengthening waiting period for new cars and the concern expressed by the Society of Indian Automobile Manufacturers that suppliers are finding it difficult to keep pace with demand also show that excess capacity is being whittled down in some parts of the economy.
Economic growth in recent quarters has been propped up by a spurt in public spending. The recovery in consumer spending and the need for more capital spending to increase capacity and build infrastructure give India a chance to start cutting its deficit in the next fiscal year.
Consumers are increasing spending because of a host of factors, including low interest rates and a more benign job market. The GDP numbers for the second quarter of this fiscal that were released on 30 November provided early signals of a recovery in consumer spending. The latest car sale numbers offer proof that this recovery is being extended to the third quarter.