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Ramesh Iyer, Managing Director, Mahindra Finance, was pleasantly surprised to know that his team had disbursed 30,000 vehicle loans in June, a huge increase from April and May when business was almost zero. “We have opened 1,100 rural branches and there are footfalls and enquiries about tractor and car loans like before,” says Iyer, admitting that some part of this could be pent-up demand also. “Through April and May, customers took advantage of the loan moratorium, but now they are beginning to pay up. They are requesting us to bring down the instalment amount. Can you give us a ₹8,000/10,000 per month EMI instead of ₹12,000 is what they are asking for.” Besides, there is also demand for additional short-term loans. “They had borrowed money during the lockdown. Now they are asking for short-term loans, which they are confident of paying back within the next 6-12 months along with the main loan. People are cautious, but they have certainly not lost hope,” adds Iyer.

The Rebound

At a time when GDP for FY21 is estimated to shrink, and the Nielsen consumer confidence index at 123 points is 15 points lower than 2019, Iyer sounds a bit too optimistic. Add to this the job losses and salary cuts across sectors, and there’s little to cheer about.

Here perhaps banking on a silver lining, though most consumer goods companies, auto as well as other sectors saw either muted or negative growth in first quarter of FY21, rural and semi-urban (Tier-II, III, IV) markets bucked the trend. A recent Nielsen report says rural FMCG sales grew at three times the pace of urban India sales in June.

While overall industry grew at 4.5 per cent in June (vis-a-vis June 2019), rural markets saw 12.5 per cent growth, according to the Nielsen report. In contrast, urban grew by just 0.4 per cent. The consumption appetite in Tier-II, III towns and cities, according to KPMG India’s consumer sentiment survey, Time To Open My Wallet, is 1.9 times more than that of metros and Tier-I cities. “Our survey indicates that Tier-II, III consumers are more liberal than Tier-I consumers in spending habits, hence these could be the next focus area for retailers to expand their presence. Around 22 per cent of consumers in Tier-II and 30 per cent in Tier-III cities said their

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