Omicron Impact: Indians to skip big-ticket purchases in 2022

As the onset of Omicron threatens the steady recovery of the economy and risks putting businesses under temporary restrictions, crippling their growth, households are gearing up to keep a strict check on discretionary expenses. A recent study conducted by community social media platform LocalCircles showed that most Indians are expected to refrain from making big-ticket purchases like property, car and jewellery in the current year.

The survey that captured about 47,000 individual responses covering over 22,000 households across 391 districts revealed that on an aggregate basis, only 15% families are likely to spend money on big-ticket purchases during the year.

The nearly two-year long pandemic that triggered imposition of intermittent lockdowns and curbs has already battered several businesses, especially the small and mid-sized ones and put millions out of jobs. Sectors like hospitality, aviation, cinema that largely bore the brunt of the pandemic are yet to see full recovery. To tide over the crisis, companies across segments had restored to temporary pay cuts, shrinking household incomes. In a worrying signal, a recent data published by CMIE showed that India’s unemployment rate hit a four-month high of 7.9% in December.

The survey that studied 9,834 responses on whether consumers are willing to purchase a residential property, a significant 83% of the respondents said that they do not plan to sign any sort of residential property deal, be it the purchase of a primary property, a secondary one or for investment purposes. Only 7% of the respondents said that they will purchase their first residential property while another 4% are likely to ink secondary residential property deals.

About 82% of 9,928 respondents suggested that they are unlikely to buy new cars in 2022. On an aggregate basis, only one in six families is likely to spend on a four-wheeler vehicle during the year. Indians have always had a fetish for jewellery. However, an astonishing 78% of 9,373 respondents said that they do not expect to buy jewellery in the current year, underscoring the Covid-led uncertainty. About 9% of them, though, are willing to spend on gold jewellery and only a minuscule 2% said they will purchase gold and diamond ornaments. On an aggregate basis, only one in seven families is likely to buy gold, diamond, silver or multiple types of jewellery in 2022.

Indians are however exploring investments in equities and mutual funds, with about two in five families indicating that they might invest in equities or mutual funds. Of the 9,088 respondents, 31% said that they will invest in mutual funds and 10% said they prefer equities. One in six families is also willing to increase their health insurance coverage in the current year. “The low-interest rates and the 25% rise in stock market indices in 2021 has led to increased confidence in equities and mutual fund investments. Covid first and second wave experience has also brought the need for health insurance and many purchased new policies in 2020 or 2021,” according to the survey.

About 47% of the survey respondents were from tier one/metro locations, 33% from tier two locations and 20% respondents were from tier three, four and rural locations.