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India’s services consumption story back on track? What ‘Google search’ data shows


The Indian economy is expected to see an improvement in consumption in the contact intensive services sector in the coming months, says a new research by QuantEco. The research analyses ‘Google search’ data of representative top brands in various services segment to gauge “consumption intent”. According to Yuvika Singhal, Economist at QuantEco Research the third quarter of FY22 will be a “consumption positive story”, allowing GDP to grow sequentially. The analysis by QuantEco shows that consumers have begun to move out and spend. The easing of lockdown related restrictions, COVID cases remaining benign and progress on vaccination, has enabled this along with the festive season acting as an “additional kicker”. It appears that a combination of pent-up and vengeance demand is taking shape, Singhal says. ‘Google search’ data shows that contact intensive services sector is leading the rebound. For example, it shows that the search for websites such as ‘MakeMyTrip’ and ‘BookMyShow’ has seen a spike in the last 8 to 12 weeks. Other search terms such as Nykaa (an indicator for beauty products), OyoRooms (an indicator for hotels/rooms), PepperFry (for home improvement) have also seen a rise in the last 2-4 weeks. “This is indicative of the enlarging breadth of consumption intentions in the festive season,” says Singhal. The data for these high-frequency indicators has been analysed from February 2020 onwards. Asked about the pre-pandemic era data, Singhal says that the comparison may be one between apples and oranges. “Consumption patterns and utlilisation of services have changed substantially due to the pandemic. For example, earlier people who were content to use public transport services are now looking at purchasing their own vehicles to avoid contact with larger crowds,” she told TOI. Going ahead, Singhal expects the consumption momentum in Q4 to be up as India moves closer to fully inoculating 100% of adult population. “Improvement in vaccination coverage will also stand to blunt the economic impact of subsequent COVID waves, if any,” she says. “Extension of the current consumption momentum into Q4 FY22, will establish the durability of the recovery while also paving way for improvement in capacity utilisation and in a turnaround in capex cycle in FY23,” she explains. QuantEco predicts an FY22 GDP growth of 10% with mild downside risks. The global energy crisis and supply disruptions need to be watched out for in that context, Singhal says. RBI in its monthly paper on the State of Economy has also noted that parts of the services sector recorded strong growth y-o-y, as indicated by improvement in trade, hotels, transport and communication, and also reflected in GST e-way bills. The paper also notes that after staying in contraction during May-July 2021, the services PMI expanded sequentially in August-September. Reopening of outlets and increased footfalls boosted consumption of services, RBI notes.


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