Budget Byte: Boosting consumer demand will be crucial task for Sitharaman

Pent-up or not, demand yet to fully recover from the pandemic impact

The pandemic has hit consumer demand, which still persists, as the recovery in house sales seems modest, though auto sales have picked up relatively faster. But a part of it has been due to pent-up and festive demand. Private consumption is a key driver of aggregate demand. But for now, the demand problem persists.

Even if demand comes back to normal, new investments would not happen unless capacity utilisation improves substantially. During the lockdown, industry’s capacity utilisation fell to its lowest ever, below 50 per cent. It improved to 63 per cent in Q2, but is still 12 percentage points lower than the usual level. Boosting demand, is thus, a crucial theme that the Budget needs to address.