Will the rate cut spur consumer spending? The consensus among the consumer electronics, consumer durables industries and retail markets is that the rate cut will help trigger consumer demand, even as a section of the fraternity is also of the view that more needs to be done to see things move at a faster pace on the ground level.
Will the rate cut spur consumer spending? The consensus among the consumer electronics, consumer durables industries and retail markets is that the rate cut will help trigger consumer demand, even as a section of the fraternity is also of the view that more needs to be done to see things move at a faster pace on the ground level.
Adi Godrej, chairman, Godrej Group, believes that the rate reduction out-of-turn will lead to increased investment and demand for items like residential housing, automobile and consumer durables that are financed. "We, however, need a further rate reduction of 300 basis points during the year," he said.
The RBI's decision to cut rate, industry players feel, is consistent with strong dis-inflationary pressures and will bring positive vibes to the economy. The decision is likely to further boost business sentiment and cater to an investment-friendly climate by catalysing growth and enhance business confidence.
Manish Sharma, managing director, Panasonic India and South Asia, and president of Consumer Electronics and Appliances Manufacturers Association (CEAMA), hopes that the rate cut will contribute towards further development of the indigenous manufacturing sector by providing a level playing field to the domestic industry. "We are hopeful, that with economic parameters showing a sustained improvement we will witness more such reductions in the future."
Calling the move a strong positive signal of things moving in the right direction, Naresh H Bhansali, CEO-finance, strategy and business development, Emami Ltd, said, "The buoyancy will help create positive sentiment among the consumers as well as business environment that can derive benefits as a result of this decision," he said.
The durables industry on the other hand is playing the wait and watch approach. According to Shantanu Das Gupta, vice president - corporate affairs and strategy-Asia South, Whirlpool of India, loan rates for durables, automobile and homes had been reduced by several banks a while ago. "However, it did not result in an upsurge in demand. Hence, one will have to wait and see what this cut does to the demand," he said.
The analysts community is of the view that rate cut is a positive development and will benefit the consumer durables sector. "The general sentiments in the economy will improve and help revive sales momentum while it will also help in easy availability of credit, thereby increasing demand in medium term," said Ankit Kedia, analyst - FMCG and consumer, Centrum Broking Ltd.
Players in the FMCG industry do not see the RBI's decision having any immediate trickle down effect as far as consumer demand for their products is concerned.
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