Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

The new consumer

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Demand problem and ways to deal with it

The focus of this article is on the behavioural changes in the consumer post Covid. It also suggest the ways to deal with these changes.

Context

  • The consumer during and post-COVID is showing remarkable flexibility, bringing about a paradigm shift in her consumption pattern.

Issue of generating demand

  • Some state governments are busy demanding the opening up of the economy.
  • However, the issue is that the economy does not merely need opening up, but it requires urgent generation of basic demand.
  • That is why consumer behaviour needs to be closely watched.
  • Since the lockdown, the priorities of consumers have seen a drastic shift.

Factors to consider to increase demand

  • 1) The decrease in the purchasing power to buy products needs to be addressed.
  • The government must look at ways like a reduction in taxes which will help the common man.
  • 2) The current scenario has also made all of us go back to the basic needs.
  • Luxury products hold little value. But renting will increase.
  • 3) The emphasis will be on saving for a rainy day, whether in the case of banks or households
  • 4) Aviation, tourism and hospitality sectors have been hit and continue to remain so even after the restrictions are lifted.
  • 5)  e-commerce has shown exponential growth and will continue to do so.
  • 6) With “Vocal for Local” gaining momentum, there’s a huge increase in local apps, local kirana stores, local artisans and brands.
  • 7) Schools and colleges have taken a hit as e-learning and online courses are being preferred.
  • 8) The entertainment industry has been drastically hit. The media and entertainment industry needs to pay heed to this and curate content accordingly.
  • 9) With a lot of people laying emphasis on their health and immunity, there’s been a substantial rise in the consumption of organic, ayurvedic, and immunity-boosting products.
  • Apart from the obvious products, financial and medical insurance will play an important role.
  • 10) Real estate will suffer as no long-term, high investment purchases will be favoured, but renting will increase.

Role of the government

  • 1) People need to be provided with their daily needs — basic essentials such as food, water, housing, and electricity.
  • The government is already taking care of that, but money also needs to be given.
  • 2) Jobs need to be provided through development of infrastructure projects.
  • 3) Farmers need to have insurance for their crops and the infrastructure to sell at the right price.
  • 4) Migrant workers with their livelihoods being disrupted are looking for support,and many are focusing on agriculture as a means of income.

Way forward

  • The government should focus on generating demand for products, and create jobs by improving infrastructure.
  • The government must incentivise spending by offering tax benefits on the amount spent.
  • Government must forget about fiscal prudence this year.
  • Consumers in rural areas are buying more than before.Companies should focus on tapping the rural demand

Consider the question “Demand has been the driver of India’s growth. But the pandemic has dampened it with devastating effect. Agaist this backdrop suggest the measures to be taken by the government to revive the demand.”

Conclusion

With focus on these emerging trends and changing behaviour of the consumers, the government must take steps to bring the economy fast on the tracks.

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