Harsha Vardhan Agarwal on Consumption and Inflation

Harsha Vardhan Agarwal, the new president of Ficci and vice chairman of Emami, discusses the impact of inflation on consumption and the prospects for recovery. He emphasizes that while rural areas and premium products are showing resilience, the middle and lower-middle classes are significantly affected by the rise in food prices.

The Slowdown in Consumption: Agarwal notes that the September quarter was challenging, with a gradual improvement expected in the coming quarters. He highlights the need for moderating inflation to restore normal consumption levels, suggesting that the RBI's cautious approach to interest rates is aimed at first containing inflation.

Addressing the Consumption Slowdown: Agarwal's solution to the consumption slowdown lies in controlling inflation and increasing government capital expenditure. He is hopeful that the upcoming quarters will see a substantial rise in government capex, which should aid in reviving consumption.

Private Investment and Wages: While acknowledging that private investment has not increased as expected, Agarwal refutes the notion of stagnant wages, noting that they may not have kept pace with inflation. He concludes by emphasizing the importance of inflation control and increased government spending in stimulating consumption.