With risks looming over, are we over relying on pent-up demand?

The deadly COVID-19 second wave has delayed India’s recovery, but what is worrying is the sluggish consumer spending due to pandemic-related concerns. This raises several questions: How damaging would the impact of successive waves be on the economy? Can consumers eventually shirk off their anxieties and resume spending with confidence? While we pin our hopes on pent-up demand to lift recovery, are there any risks that may materialize?

We responded to the first question in our earlier publication (see “The tunnel just got longer, but you can still see the light” for more details). In this report, we try to answer the other two questions. We also acknowledge that the country needs effective policies to address risks that weigh on consumer confidence and thereby, boost spending.