While there has been much doom and gloom about the Indian economy, several facts give a completely different picture. Consumer demand, for instance, is far from being subdued. Demand for two-wheelers, refrigerators, television sets and housing has been robust, all indicators that the consumer has money to spare. Confirmation of that is also available from the burgeoning growth of bank deposits, while the resilience in demand is only to be expected given the fact that GDP growth has continued to be respectable. Logically, it should be only a matter of time before the ripple effects from increased demand for consumer durables begins to act positively on the overall industry. This is all the more so because lower margins have made it imperative to increase volumes in order to protect earnings. The problem seems to be excess capacities set up in the core industries, which will take time to be fully utilised, coupled with competition from imports. The buoyancy of consumer demand isillustrated by the industries given below:

Two-wheelers: Take for example the improved performance of the two-wheeler segment in the first quarter of the current fiscal. Lending credence to this growth story, have been the performances turned in by all the three segments of the two-wheeler industry. However, the motorcycle segment has clearly led the two-wheeler surge with companies like Hero Honda, TVS Suzuki and Bajaj Auto emerging as the fore-runners. In fact, the growth story in the motorcycle segment has continued with sales improving a solid 18 per cent to 2.95 lakh units during the first quarter.

Interestingly, all the three vehicular segments in the two wheeler industry have witnessed improved fortunes in the first quarter. Sales in the scooter segment which were the hardest hit last year, have jumped 12.65 per cent to 3.34 lakh units compared to 2.97 lakh units last year. Incidentally, this segment of the two wheeler industry had witnessed a negative growth story last year when salesactually dipped 8 per cent (the first time in the last decade), thanks largely to the marked shift in demand from scooter to motorcycles. Companies like LML and Bajaj Auto have done exceedingly well in this market, with interesting schemes to induce purchase. Besides, sales have also improved in the moped segment, unlike the 10 per cent dip in offtakes witnessed last year.

Consumer durables: This is another segment which has managed to shirk off the sluggish demand trend, which is indicative of improved consumerism and increased disposable incomes. Over 15,46,250 refrigerators were sold in the market this summer, indicating a 25 per cent growth over the number of units sold between February and June, 1997. While the growth in conventional refrigerators was expected, the premium-end frost free segment has also witnessed a solid 16 per cent growth.

The first quarter also witnessed huge buying activity in the room air-conditioner and split air-conditioner segments. With sales growing at a fast clip of25 per cent-30 per cent, it was companies like Carrier Aircon, Voltas and Amtrex Appliances which enjoyed strong revenue accruals. Analysts estimate that the buoyancy in this segment, was largely due to the availability of a whole new range of products, service packages and cheap and easy finance options for the consumer.

Furthermore, sales in the colour television market have also finally bounced back after having gone through a rough patch during the last two years. This transition has been largely due, to the entry of a slew of multinationals that have changed the entire dynamics of marketing in the CTV segment and attractive exchange schemes. Companies like Akai with their no- frill products have managed to garner a market share of 10.9 per cent between January and November, 1997, against a 2.8 per cent share in the previous period. Indian companies like BPL and Videocon also together account for nearly 45 per cent of the market share.

Given that demand in the highly price-sensitive televisionsegment, companies have managed to generate profitability through volumes albeit at a slight cost to their margins. Clearly reflecting this fact is growth in CTV sales from 1.95 million to 2.3 million units, which has been achieved against at the cost of black and white TV sales which dipped from 6 million units to 5.6 million units for the first time after 1991.

Housing: With real estate prices having witnessed an unprecedented fall, the first-time house buyers are now finding it more affordable to buy a house. The pent-up demand for budget homes appears to be reaching a critical volume and the first signs of a price stabilisation are showing up in this segment. Cities like Hyderabad are already witnessing renewed interest and a firming of property prices.

The real fall has been witnessed in Mumbai where property prices were pushed to unrealistic highs due to speculative buying. The demand from genuine first-time buyers has not waned and not all are postponing their decisions to buy hoping forprices to fall further. This is clearly evident from the growth in disbursements by HDFC which have increased progressively from Rs 1,684 crore in 1995-96 to 2,101 crore in 1996-97 and to Rs 2,754 crore in 1997-98. The growth rate of disbursements, which had fallen from 39 per cent in 1995-96 to 25 per cent in 1996-97, has risen to 31 per cent in 1997-98.

Construction activity is, however, not picking up yet. Builders in the metros are stuck with projects that were targeted towards the super premium segment. This segment is very small and there is hardly any user demand. Till these premium houses are sold, which is unlikely to happen in a hurry, the builders will be unable to promote budget housing projects that are very much in demand.

(With contributions from Percy Dubash and Sarad Saraf)