January 4, 2022, New Delhi: Savings is no longer an optional extra, but a must. That’s one lesson the COVID pandemic has taught many of us with national and local lockdowns from end-March till June 2020 disrupting income and livelihoods and then once again during the 2nd wave in April-May 2021.

The pandemic has significantly impacted households’ income after many primary earning members of families lost their jobs, faced salary cuts and delays vis-à-vis altered their investment pattern, consumption of products and services, change in a savings plan, etc. Per the Reserve Bank of India (RBI) in its latest survey, India’s consumer confidence index stood at 62.3 in November, showing positive sentiments with signs of improvement compared with the last datapoint in September when it stood at 57.7. While the disruptions in 2020 and 2021 have been significant, the economic recoveries both in 2020 and 2021 has been a positive surprise for many with strong economic rebound in most sectors including the worst impacted ones like travel and tourism.

Going into 2022, as uncertainty once again rises in India over a more transmissible Omicron variant rapidly spreading across the country and case-loads rising in many major cities, LocalCircles has conducted a national study “India Consumer Spending Outlook – 2022” to understand consumer sentiment for the year 2022. The study has attempted to understand consumers’ plan to purchase residential property, 4-wheeler, health insurance, jewellery, and equities or mutual funds in the year 2022. The study received more than 47,000 responses from households residing in 391 districts of India. 63% of the respondents were men while 37% were women. 47% respondents were from tier 1/metro locations, 33% from tier 2 locations and 20% respondents were from tier 3, 4 and rural locations.

1 in 7 families likely to spend on residential property in 2022

According to experts, the impact of the 2nd wave on the sale of residential properties was lower than what it witnessed in the 1st wave of the COVID pandemic in India. While prices remained stagnant in 2021, stamp duty cuts in states such as Maharashtra, West Bengal and Karnataka increased demand for housing in the first quarter of 2021. Further, the demand for larger homes also increased to accommodate work from home and e-schooling. As people spent more time at home during two COVID waves, they realized the importance of a good home and hence many have been seeking to upgrade their homes and some who can afford are looking to find bigger ones.

The first question in the study tried to find out if citizens are planning to purchase a residential property in 2022 as first home, a secondary home or an investment property. In response, 7% said they will be purchasing their first or primary residential property, and 4% will be purchasing their second or secondary residential property, while 4% will be purchasing a residential property for investment purposes. 83% of citizens do not plan to purchase any residential property. On an aggregate basis, 1 in 7 families is likely to spend on residential property in 2022. This question in the survey received 9,834 responses.

1 in 6 families likely to spend on a 4-wheeler vehicle in 2022

The automotive industry experienced a significant drop in sales and 2020 and continued to face challenges in 2021 as costs of raw materials rose and states went into subsequent lockdowns. However, it was able to recover in the second half of 2021. As per the Automotive Component Manufacturers Association of India (ACMA), the turnover of the automotive component industry stood at INR 1.96 lakh crore for the period April 2021 to September 2021, registering a growth of 65% over the first half of the previous year. However, new vehicle sales in India declined by 2.7% in November as compared to November 2020, according to the Federation of Automobile Dealers Associations (FADA).

The next question sought to know if citizens are planning to purchase a car in 2022 and if so of what type. In response, 7% said they will be purchasing a “Petrol car”, 3% plan to buy a “Diesel car”, and 6% said they may buy an “Electric car”. The majority of 82% of citizens said they “Do not plan to purchase any car in 2022”. On an aggregate basis, 1 in 6 families is likely to spend on a 4-wheeler vehicle in 2022. This question in the survey received 9,928 responses.

1 in 7 families likely to spend on gold, diamond, silver or multiple types of jewellery in 2022

The jewellery market also witnessed a decrease in sales at the beginning of the pandemic, with citizens prioritising healthcare and savings. However, it has skyrocketed in the last few months of 2021, with festivals and a 57% surge in weddings as compared to a year ago. Jewellers have reported a 30% increase in footfall while sales have jumped almost 50% compared to pre-pandemic times with an increase in ticket size for bridal jewellery. Jewellery players expect revenue growth of about 15-25% in the fiscal third quarter-ended December. As per CapitalVia Global Research, gold imports have jumped by 20% year-on-year during the third quarter as jewellers imported more gold to meet the increased demand for the products. The bumper weddings happening this season are expected to push gold imports to a six-year high to 900 tons, as per metals research consultancy Metals Focus, reported Bloomberg. India had imported 350 tons of gold last year, according to the World Gold Council.

The following question in the study sought to know the plan of citizens or their family to purchase jewellery in 2022. In response, the majority of 78% of citizens said they “Do not plan to purchase any jewellery in 2022”. There were, however, 9% who “Will be purchasing gold jewellery”, 2% plan to purchase “Gold and diamond jewellery”, another 2% will be purchasing “Gold and silver jewellery”, and 1% will be purchasing “Gold, diamond and silver jewellery”. 8% couldn’t say. On an aggregate basis, 1 in 7 families are likely to spend on gold, diamond, silver or multiple types of jewellery in 2022. This question in the survey received 9,373 responses.

If responses given by citizens are prioritised on an aggregate basis, the survey findings indicate that 14% “Will be purchasing gold jewellery”, 3% “Will be purchasing diamond jewellery”, and 3% “Will be purchasing silver jewellery”.

2 in 5 families likely to prefer investments in equities or mutual funds in 2022

India has witnessed a rising trend of investment in equities and mutual funds over the last year. As per Scripbox, more than 81 lakh investor accounts were added in 2020-21. City-wise assets under management (AUM) data of mutual funds show a sharp jump in mutual fund investment from smaller towns. The latest data by Association of Mutual Funds in India shows that over the last one year, towns outside the country’s top 110 cities saw their share in industry AUM jump from 10.21% in June 2020 to 15.44% in June 2021, reflecting a 50% surge. With the strong performance of the stock market indices and low interest rates on fixed deposits, many retail investors took to investing in shares and mutual funds in 2021.

The next question in the study asked citizens if they or families’ most preferred investment asset class in 2022. In response, 10% said “Equities”, 31% said “Mutual funds”, 4% said “Gold”, and 22% said “Bank fixed deposits”. 28% said they don’t have plan to make any such new investments in 2022, and 5% couldn’t say. On an aggregate basis, 2 in 5 families are likely to prefer investments in equities or mutual funds in 2022. This question in the study received 9,088 responses.

1 in 6 Indian families likely to increase their health insurance coverage in 2022

The rising cost of healthcare in India, especially in the aftermath of the two COVID waves has fuelled the demand for health insurance across the country with many more realising that they need health coverage. This was validated by an increase in sales of COVID-linked products and other health cover policies, industry experts estimate. According to the Insurance Regulatory and Development Authority of India (IRDAI), at least 24.34 lakh health insurance claims for COVId-19 treatment have been filed between March 2020 to September 7, 2021, with claims amounting to a total of INR 30,806 crore. Of which, about 85% of claims have been settled so far. Many insurers had revised premiums by about 10-15% last year after meeting IRDAI norms for standardisation of exclusions. States, including Maharashtra, Gujarat, Tamil Nadu and Karnataka account for 64.5%, or 15.71 lakh, of the country’s health insurance claims for COVID-19.

With Omicron on the horizon and known to be 3-5 times more transmissible The final question in the study asked citizens about their plan to purchase new or increase health insurance coverage in 2022. In response, the majority of 67% of citizens said they “Will keep the current health insurance coverage as is”, 15% said they “Will increase the health insurance coverage amount”, and 18% said they “Do not have health insurance coverage and don’t plan to purchase it either”. On an aggregate basis, 1 in 6 families are likely to increase their health insurance coverage in 2022. This question in the study received 8,975 responses.

In summary, while the two COVID waves in 2020 and 2021 impacted livelihoods and earnings for many, the economic rebound in India has been strong, especially post the 2nd wave. This has led to rise in optimism amongst a set of consumers, believing that even if an Omicron led 3rd wave impacts India, it will cause 1-2 months of disruption followed by revival. Hence the spending outlook on big ticket items looks relatively robust with 1 in 7 families likely to spend on residential property in 2022 and 1 in 6 families likely to spend on a 4-wheeler vehicle. Demand for jewellery also is likely to be robust with 1 in 7 families likely to spend on gold, diamond, silver or multiple types of jewellery. 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 with 2 in 5 families keen to invest in equities or mutual funds in 2022. COVID 1st and 2nd wave experience has also brought the need for health insurance and many purchased new policies in 2020 or 2021. The study finds that 1 of the 6 families will take additional coverage in 2022 as an Omicron led 3rd wave now looks imminent.

Survey Demographics

47,000 responses were received from households residing in 391 districts of India. 63% of the respondents were men while 37% were women. 47% respondents were from tier 1/metro locations, 33% from tier 2 locations and 20% respondents were from tier 3, 4 and rural locations. The survey was conducted via LocalCircles platform and all participants were validated citizens who had to be registered with LocalCircles to participate in this survey.