India’s biggest companies no longer offer a rose-tinted window onto the world’s fifth-largesteconomy. Shoppers have been tightening their purse strings for years. Now the austerity is spreading from the rural poor to the urban rich.
That is the opposite of the recovery story that was supposed to play out. GDP is growing at 6.7% but the reality is that consumption has been weak in India since at least 2020.
Income growth is anaemic: casual and regular workers in 2023 earned a monthly wage 1% lower than in the previous year, per an International Labour Organization report based on government data. For a while, big companies that dominate the country’s stock benchmarks like the Nifty 50 Index .NSEIseemed well insulated.
The latest set of company earnings suggest otherwise. Hindustan Unilever’s HLL.NS net profit fell 2% year-on-year for the three months ended September.
Reliance Retail – a unit of $215 billion Reliance Industries RELI.NS – reported a 1% drop in revenue in the same quarter and shrank store space by 2% from its June level;boss Mukesh Ambani’s execution on strategy looks as much of a problem as a softening economy. Shoppers Stop SHOP.
NS, an upscale department store, logged its second straight quarter in the red. The list goes on. The hope was always that the incomes of the poor who were buying fewer biscuits would improve.
Instead, urban demand is showing weakness too – sales of fast-moving consumer goods groups in cities are growing at nearly one-fi.
