How deep is the consumption slowdown? While everybody in the market has been asking the question, not many have an answer. Sanjiv Bajaj, managing director of Bajaj Finserve that has a thriving business of consumer loans under Bajaj Finance, thinks the slowdown is “dramatic".

Bajaj, in a CNBC-TV18 interview on Monday, said the company had seen lower growth in the first quarter of FY19. The 8% drop in Bajaj Finance stock on Monday should give some hint as to how this fear has gripped the market.

The fact that consumption stocks haven’t seen great days and revenue growth looks benign, for everyone from toothpaste makers to home appliance builders, shows that Indians have begun postponing their purchases.

Bajaj Finance’s business model is wrapped around hooking Indians to consume, one equated monthly instalment (EMI) after another.

Bajaj finds unusual that television sales are lower even as a mega event like cricket World Cup series is on. Indians can never get enough of cricket and how much of this drop in television numbers is due to shift to streaming services is unclear.

HDFC Bank, another lender with more than half of its loan portfolio consisting of retail loans saw its growth drop to multi-quarter lows in April-June period, the lender said in a pre-earnings release on Monday.

The upshot is that the consumption slowdown is real and in Bajaj’s words dramatic.

As our column pointed out last week, the commentary from consumer staples companies is not encouraging.

With the Union Budget giving no immediate fillip to consumption, all eyes are now on monetary policy to push consumption demand. Even so, it is likely that it could get worse before it gets better and most analysts are foreseeing a delay in consumption revival.


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