As per QuantEco Research’s TRUCE Index, domestic consumption regained momentum at the start of 2024, after decelerating over months of Nov-Dec-23.

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Mar 26, 2024

QuantEco Research || Jan-24 TRUCE Index - An upbeat start to the year

Urban TRUCE index surged to 0.67 in Jan-24 – the highest level in 8 months, from 0.60 in Dec-24. In comparison, the increase in rural consumption was sober, up at 0.62 in Jan-24 from 0.59 in Dec-24. The strength in urban consumption was led by – passenger vehicle sales at a record high and air passenger traffic, along with higher petrol consumption and credit offtake by banks for personal loans. On the rural side, while two-wheeler sales, agri credit offtake and agri wages continued to impart support to consumption, the rural TRUCE index was weighed down by lower tractor and fertilizer sales in Jan-24.

Looking ahead, we expect rural consumption to fare better amidst continued backing from fiscal measures, Rabi production expected to fare better than initial estimates with Mar-24 temperatures being close to normal, El Nino turning neutral by Apr/May. In comparison, we are of the view that urban consumption could face headwinds going into FY25, as lagged impact of higher interest rates and RBI’s measures on unsecured retail lending play out. Growth in credit offtake by SCBs to NBFCs has more than halved from 34.7% in Jun-23 to 15.6% in Jan-24, though growth of personal loans continues to hold-up.