India’s K-Shaped Consumption May Narrow, Affluent Segment Faces Fatigue, Says UBS Report

A recent UBS report – “India Economic Perspectives: Five Key Questions for the Indian Economy” - delves into the challenges and opportunities facing India as it seeks to become the world's third-largest economy. The report highlights key issues such as inflation, job creation, consumer sentiment, and the potential impact of upcoming elections. One of the primary points raised is India's K-shaped consumption pattern, where affluent consumers are showing signs of fatigue, while lower-income segments may see a boost due to increased rural demand and public spending. Tanvee Gupta Jain, Chief India Economist at UBS Securities India, talks about the evolving consumption trends post-pandemic in this exclusive conversation. While the premium segment has slowed, factors like strong monsoons, rising public expenditure, and increased social welfare spending may stimulate demand in lower-income groups. Additionally, the report explores the implications of household savings transitioning from bank deposits to alternative asset classes, along with the Reserve Bank of India's monetary policies. As India navigates its path forward, fiscal discipline and sustainable growth remain crucial challenges.