Monday, September 7, 2009

Lifestyle, Pay panel and NREGA push up consumer durables sale

Evolving lifestyles, sixth pay commission and National Rural Employment Guarantee Act (Nrega) have pushed up sale of consumer durables by reducing replacing cycle by half, says a study.

Replacement cycle for television has come down to 4-5 years from 9 years, while for household appliances it has fallen to 7-8 years from 12 years, according to a joint report by Assocham-Ernst & Young.

An average 21 per cent hike in the salary of nearly five million employees of the Central government in the wake of the sixth pay commission released an additional spend of 3.7 million dollars, while the Central budget has allocated 8.15 billion dollars under NREGA in 2009-10, said Assocham president Sajjan Jindal.

More than 44.7 million households were provided employment in 2008-09 under NREGA, while both their number and wage are likely to go up this year as the government has commited a daily wage of Rs 100 this year, Mr Jindal added. Further improvement in income level of households could further bring down replacement cycle of consumer durables.

The report says a fast rate of obsolescence in technology is also bringing down prices of products and making them affordable to lower income groups as well.

Mr Jindal urged manufacturers of televisions and domestic appliances to design and offer low-cost products to tap a market of 121 million households with income levels in the range 1,500 to 10,000 dollars.

The report says sale of consumer durables will further pick up with expansion of rural electrification, road network, irrigation and telephone connectivity.

Under Bharat Nirman, the government has planned electrification of 1,25,000 villages during the eleventh plan and this, the report says, will electrify an additional 23 million households affording an opportunity to use electric and electronic appliances. According to Central Electricity Authority, 76.5 of the country's villages had been electrified as on March 31, 2008.

Similarly, 1,46,185 km of new rural roads will connect 66,802 habitations and drinking water provided to 55,067 uncovered habitations during the plan period, the report says. The plan also envisages irrigation to 10 million hectare and telephone connectivity to 66,822 villages.

All these initiatives will further open up markets for consumer electronics and appliances such as televisions, audios, refrigerators, air coolers and air conditioners, concludes the report.
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