THE way car salesman Ashish Bhavsar tells it, in India, men come first on their own to eye up a potential purchase. Then they bring their wives. Then — if it’s serious — the whole family.

    On this weekday, almost two weeks after the Reserve Bank of India (RBI) cut interest rates, a young boy and his elderly grandmother inspect a sports utility vehicle at a busy Hyundai Motor dealership in downtown Mumbai, while his parents speak to a sales agent nearby. That’s good news for branch manager Bhavsar.

    He estimates that cheaper borrowing could mean sales growth of 12 to 15 percent this year, above his 10 percent target.

    “Many customers were waiting for rate cuts. They didn’t want to make a decision,” he said with a grin, surrounded by gleaming new cars. “They will definitely come now.”

    India kicked off its two-month religious festive period yesterday, a time considered auspicious to buy big-ticket items such as cars, and when promotions abound. Company executives say they see the RBI’s unexpectedly sharp 50 basis points cut last month as a lifeline.

    Consumers have already been showing an eagerness to spend more on small luxuries, like movie tickets and fancy hair cuts, even as the overall economy struggles to take off after a period of cooler growth.

    Yet with retail spending accounting for 50 to 60 percent of the economy, India needs households to splurge on more expensive, higher-margin items like washing machines, TVs and cars.

    To date, a combination of slow consumer spending and a dearth of corporate investments has delivered a double punch to the economy, which grew a slower-than-expected 7 percent in the April-June quarter, well below the government’s 8 to 8.5 percent target.

    With inflation around record lows and central-bank rate cuts totalling 125 basis points so far this year, retail executives believe a consumer recovery is now in the offing.

    Firms selling discretionary items such as cars and electronics are desperate for such a recovery. They have reported double digit annualized falls in earnings for the past four quarters. (SD-Agencies)