According to a leading asset management company, consumers are spending much more than their income and also resorting to loans to fund their lifestyle, resulting in a ‘serious slowdown‘ in consumption. SBI Mutual Fund refused to give an outlook on the markets for the near-term, pointing to the ‘volatilities’ on both the domestic and global fronts.
Consumers were not saving any income but consuming more than their income, which helped in increasing access to the leverage. However, personal consumption spending has outgrown household income, leading to the household savings plummeting to a low 21% in FY18 from 34% in FY10, while the share of consumption has gone up 290 bps to 59.1% of GDP in FY18 during this period. At the same time, annual household liabilities have been building up at 3-4% of GDP annually or 4-5% of the disposable income. As per SBI mutual fund, it has been able to change the perceptions on how it votes and companies are discussing proposals with it beforehand because of the fear of negative voting when it is taken to the shareholders, to claim that the markets are punishing the wrongdoers on the environment, social and governance front.