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Consumption is sputtering across a range of products including cars, two-wheelers, air travel and fast-moving consumer goods (FMCG), with volumes dropping to multi-quarter lows. The decline in demand stems from an income growth slump in urban and rural areas that’s forced people to curb spending, falling money supply in the economy and rising uncertainty over how customers will respond to regulatory action, experts said. The next government may need to prime the pump as consumption has been one of the engines that has been driving the economy in the absence of private investment and exports.“You can’t say FMCG is recession proof but it is recession resistant,” said Hindustan Unilever chairman Sanjiv Mehta during a press briefing after March quarter results. “People don’t stop bathing or cleaning their teeth when conditions become tough. What happens is the number of brands in a family gets reduced —instead of using larger packs, they shift to more price-point packs. That’s the kind of shift that happens.”Passenger car volumes have dropped in nine of the past 10 months. Growth was down to 2% in the last fiscal year, the lowest in five. Two-wheeler volume growth fell to the lowest since the currency note swap exercise in November 2016.Volume growth at leading FMCG companies that derive more than a third of sales from rural areas has dropped to a six-seven-quarter low. Indian airlines carried 11.6 million passengers in March, a mere 0.1 percentage point higher than a year earlier, representing the slowest increase since June 2013.Experts cited three key factors. Farm income growth has been weak for over two years with prices having stayed low, as reflected in the marginal rise in agricultural inflation. The growth in nominal gross domestic product (GDP) for agriculture was 2% in the October-December 2018 period, the slowest in any quarter since April-June 2012.Second, the benefit of price reduction due to the reduction in goods and services tax (GST) has run its course. The third reason is the liquidity crunch sparked by the Infrastructure Leasing & Financial Services (IL&FS) default in September last year. In any case, according to Credit Suisse , money supply as measured by M3, has lagged behind GDP growth since 2016.“Macro (household savings data) and micro (sector and company volume data) suggest that households may have gradually reduced consumption due to insufficient income growth,” Sanjeev Prasad of Kotak Institutional Equities said in a note.Axis Capital economist Prithviraj Srinivas said income growth patterns and nominal agricultural GDP growth indicated that consumption trend has been slowing since from 2017. Disruptions due to demonetisation and GST implementation have accentuated this, he said.Maruti Suzuki’s volumes dropped 17.2% in April, the sharpest decline since August 2012. In April, top-selling models such as the Baleno, Dzire and Swift witnessed a volume drop of 15-31% year-on-year. The company has guided for 4-8% volume growth for the current fiscal.The lower end of that range implies the slowest growth in five years. The current fiscal is unpredictable since customer response to price changes due to new regulatory norms pertaining to emissions is unknown, said Maruti CFO Ajay Seth in a post-earnings conference call.Carmakers have two options owing to regulatory disruption, said Gaurav Vangal, country head, production forecast, at IHS Automotive. They could show 5-6% volume growth in the current year and negative growth for the next year, or calibrate the current year volume growth to 1-2% and restrict themselves from posting negative growth for the next year, he said.A senior official at a leading car maker said that volume growth is unlikely to recover before the early second half of the current fiscal as inventory adjustment between wholesale and retail will take some months. Hero MotoCorp said in a post-March quarter conference call that inventory levels are 10 days higher than average.The worst-affected segment in two-wheelers has been the scooter segment, where growth turned negative in FY19 for the first time in 13 years. Scooters are typically used in urban areas.The average volume growth of HUL Dabur and GCPL was 6% in the March quarter, 2.66 percentage points over the previous quarter, and management commentary indicates a further moderation in the April-June period.HUL’s volume growth fell 7%, the lowest in six quarters, with the narrowest margin expansion in 10 quarters. According to HUL, rural growth was 1.1 times urban demand in the March quarter compared with 1.3 times in the previous quarter.