THE CONSUMER WINS--CRISIL. the hindu

ECONOMY UPDATES—the hindu

EFFECTS OF FALLING FUEL PRICES AND INFLATION- CONSUMER IS THE WINNER!- CRISIL.

Indian private consumption will pick up in fiscal 2016, helped by falling fuel prices and inflation, according to Crisil Research. 

As a result, it expects household purchasing power to increase by Rs.1.40 lakh crore in the said period. This will, in turn, help sale of passenger vehicles and consumer appliances.

According to Crisil Research, savings on fuel expenses alone will be Rs.30,000 crore, and it will over thrice that amount at Rs.1.10 lakh crore for food.[MORE SAVINGS ON FUEL THAN OVER FOOD]

INCREASE IN SPENDING POWER

This will lead to increase in spending power of Rs.1.40 lakh crore in fiscal 2016, when compared to Rs.50,900 crore in fiscal 2015, Crisil said. “These converging tailwinds, we believe, will lend the Indian economy a reasonably good consumption kicker.”

The firm expects these monies to more likely be spent on discreationary items than being put in formal savings. “...because the rise in real returns will be marginal given that nominal interest rates are on the decline.”

[SO IT IS BELIEVED THAT THE EXTRA MONEY WILL BE SPENT RATHER THAN SAVED. AS, THE INTEREST ON THE SAVINGS IS JUST ABOUT MARGINAL, DUE TO THE FALLING INTEREST RATES.]

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