A report from State Bank of India (SBI) questioned the ‘exaggeration’ of the current slowdown as it said that changing customer preferences, base effect and global factors were leading slower growth in sales in the auto and fast moving consumer goods sectors.
While acknowledging that the economy was undergoing a slowdown, Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI, said it is not all doom and gloom in the FMCG sector, where the volume growth decline of listed companies in the first quarter of the fiscal has been cited for growth slowdown. “Interestingly, it is pertinent to note that volume growth was dismal, mostly negative for major companies in Q1 FY18 due to which growth in Q1 FY19 was much higher, thereby making the volume figures in Q1 FY20 appear weaker,” Mr. Ghosh said in the report.
He argued that one of the reasons for a downward bias in the data could be the change in the behavioural pattern of consumers, who are leaning more towards herbal and ayurveda oriented personal care products in the unorganised or small business segments, which is not formally captured by the data survey teams.
“With increasing tilt towards e-retailers, consumers are now also buying bigger packets and thus the demand for smaller sachets is declining,” the report said.
On the auto sector slowdown in India, the report said, it was a part of the global crisis that was unfolding.
The author predicts Q1FYGDP to be at 5.6% with a downward bias.
