The Indian consumer has disappointed in the past 10 years as most segments should have increased 3 to 7 times, but income levels have remained depressed.
That’s what market expert Manish Chokhani said during a webinar hosted by Axis Capital.
He said the Indian consumer has disappointed in the past 10 years, India’s purchasing power having been destroyed due to high interest rates and weak currencies.
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While the bull market of the past 10 years has been largely in consumer stocks, which have experienced significant multiple expansion, underlying consumption has never really exploded, he added.
“Most segments should have grown 3 to 7 times, but due to insufficient key drivers, income levels have remained depressed and tight.
“From the sale of 2 million cars in 2010, we should have reached 12 million cars; from 10 million bikes, we should have been 35 million bikes; from a $ 88 billion mortgage market, we should have reaching a $ 650 billion market “and by selling 2.5 million air conditioners, we should have reached 18 million air conditioners,” said Chokhani.
He said India should have done it if you stick to what happened in other markets as they expanded, including China.
China has grown from the same car market size as India to 27 million cars and their average price per car purchased is three times the price of India per car purchased. “So they buy Toyota Altis, while we buy Maruti Alto. It has become a market 30 times larger than India,” said Chokhani.
He added that the era of globalization has peaked. “After Covid, the world will not live in an optimized global supply chain, China being the global factory producing everything. These chains will move and get much closer to shore. The era of globalization, supply chain optimization, financial optimization seems to have peaked for now.
“The type of labor-intensive jobs that China has taken away from the world and the extent to which countries would need this labor may be India. could benefit. “
He added that India must move away from focusing mainly on what happens to those at the bottom of the pyramid to think of the whole stack as to what happens to the whole country. The basic idea should be to reflect the balance sheets that are wiped out either by bringing in new equity or by allowing companies to make more profits. Healthy businesses can ensure healthy job creation, said Chokhani.
“In the future, India is poised to be a low-leverage country and a low-leverage entrepreneurial class. We are in a position where banks and companies diverge risk with low tolerance for credit risk The government needs to plan and allow the profit cycle to come back beautifully, “he added.
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