Fino Payments Bank, which also runs a cash management business, said it had surpassed pre-Covid performance. Rural spending has surpassed pre-Covid levels, while semi-urban areas are at 93% of pre-pandemic spends and urban markets have recovered 60%, CMS said. Nearly 70% of the company’s business is concentrated in rural markets, which are consuming and spending more cash than before.
“The impact of lockdown is not seen so much in the rural markets which have bounced back handsomely especially on the back of agriculture, which has come to the rescue again,” said Anush Raghavan, head, cash business unit, CMS Info Systems. “Monsoon has been good and direct benefit transfers by the government have had a positive impact. It’s a sustainable recovery to my mind,” he said.
Remittances, cash withdrawals rise
Spending on FMCG was up 16% from pre-Covid levels, ecommerce by 9%, consumer durables by 7% while insurance was at 99%.
The sectors that remain affected by the pandemic are media and entertainment at 40% of pre-Covid levels, hospitality at 49%, apparel at 50% and railways at 33%.
“In January, we were doing Rs 600 crore collections on our cash management vertical – this crossed Rs 1,000 crore in September. This is clearly indicative that retail spends are rising,” said Rishi Gupta, CEO, Fino Payments Bank. “These are largely collections on the ecommerce front like Swiggy, Zomato, Ola and from nonbank lenders.”
Remittances and cash withdrawals were other indicators of rising retail spends, surpassing pre-Covid levels in September. Anand Kumar Bajaj, CEO of AePS facilitator PayNearby, said the company processed nearly Rs 1,500 crore in remittances in September against Rs 1,000 crore in January. Cash withdrawals, thanks to the government’s direct benefit transfer scheme, exceeded pre-Covid levels of Rs 2,000 crore with September clocking more than Rs 3,000 crore. It has also recorded 60% jump in transactions to 16 million from 10 million in January.
“We are seeing a good momentum in September both on the remittances and withdrawals side and are now doing better business in comparison to January,” Bajaj said. “With the incoming festive season, we are hopeful that we will leave behind the gloom and doom caused by the pandemic.”
India’s GDP shrank a record 23.9% in the first quarter ended June. The RBI expects full-year GDP to contract 9.5%, implying a turnaround in the remaining quarters.
“Sectors that would ‘open their accounts’ the earliest are expected to be those that have shown resilience in the face of the pandemic and are also labour-intensive,” RBI governor Shaktikanta Das had said on October 9. “Agriculture and allied activities; fast-moving consumer goods; two-wheelers, passenger vehicles and tractors; drugs and pharmaceuticals; and electricity generation, especially renewables, are some of the sectors.”
Agriculture a bright spot
A recent report by brokerage Motilal Oswal suggested India’s economic activity contracted only 3% in August after a washout in the first quarter. Farm activities maintained robust growth, implying that non-farm GVA shrank 3.9% in August.
Global brokerage house Nomura also said India’s business activity continued its slow trek higher with the India Business Resumption Index rising to 82.1% for the week ended October 4 from the previous week. “Intermittent and extended lockdowns in top 100 cities, rise in job losses and wage reduction across sections have further weakened consumer sentiments, resulting in higher demand for value-for-money products,” said Shirish Pardeshi, analyst, consumer staples and discretionary, Centrum.