As the economy accelerates its southward journey, policy-makers and others alike are at their wit’s end to arrest the slide and pull it up.
The recent move to align bank lending rates to the ‘repo rate’, the rate at which the Reserve Bank of India lends money to commercial banks, and the pressure to cut the Goods and Services Tax on automobiles among others are seen as measures to rev up consumption demand.
The action on linking bank lending rates to the repo rate nevertheless gives us a clue or two on the functional autonomy enjoyed by banks in the emerging Indian political context.
In all these moves and free-wheeling suggestions, there are some discerning trends among the consumers, especially the millennials who are set to form the fulcrum of the new buying class.
The aspirations of this significantly growing section are either not spotted or ignored. The integration of the global community in the wake of liberalisation has given rise to a new kind of global citizen, whose thought process and aspirations have not exactly been in sync with the earlier idea of a typical citizen.
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These millennials are not the ones who like to be tied up in EMIs (equated monthly instalments) well past their retirement for the loans they have taken for buying homes. They aren’t willing to invest in homes where they are not going to live, given the uncertain nature of their jobs. The cost of ownership aside, locking up funds in a permanent home robs them of crucial flexibility they may need in their work experience.
Home finance company heads informally concede this change in the mindset of the millennials. Added to this is the slowdown-induced worries for investment-centric home buyers. All these have combined to put the housing market in a serious bother.
The cost of ownership factor yet again appears to be working heavily in the automobile field, with customers enjoying `Uberisation’ . At least a part of the current slowdown has been attributed to the fact that the shared mobility concept has really picked up, and everybody, especially millennials, are happy to go with it.
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Again, the commercial space needs a look within itself, with competition coming from pipeline operators, railways, sea-route transporters and the like. The capacity and demand-supply calculation needs to be reconfigured in the light of these new competitors for commercial vehicle makers. Given the quiet metamorphosis that is happening across industry segments, one is not quite sure how the conventional prescription can provide the cure for the ills of the economy.
Though disruption is the new normal in the modern global context, its transmission is happening at a hectic pace. That leaves India Inc’s management in disarray. The government will do well to quickly spot these dramatic changes in the mindset of the millennials to come out with workable remedies. Further delays in understanding this will trigger deeper perils. A piecemeal, instalment-based solution is unlikely to provide a permanent cure.
K.T. Jagannathan is a senior financial journalist.