Friday, 17 May, 2024
The future expectations index has dipped below 100 twice in the last three years, once in May 2020 and then again in May 2021.
The bi monthly Consumer Confidence Survey was released by the Reserve Bank of India and it is clear that Indian consumers are not very confident that the economic situation has tuned the corner. This, despite an 8.7% GDP growth rate in 2021-22 and a projected GDP growth rate of 7.2% in the current year. According to the survey, the current situation index stood at 77.3. Any value below 100 reflects pessimism in the minds of consumers. The last time the current situation index had a value above 100 was in May 2019, revealing the persistent weakness in the Indian economy, at least as at as consumers are concerned. However, the typical Indian consumer seemed far more confident of future prospects of her economic situation. The value of the future perceptions index in July 2022 stood at 113.3, comfortably above the 100 threshold that marks a transition from pessimism to optimism. The future expectations index has dipped below 100 twice in the last three years, once in May 2020 and then again in May 2021. The first was caused by the draconian lockdown imposed by the government that crippled all economic activity while the second was caused by the destructive second wave of the pandemic. At total of 6083 respondents spread across 13 cites were contacted for the survey.
As the first pie chart clearly indicates, Indian consumers are downright pessimistic when it comes to the general economic situation. The primary reasons behind this negative outlook are persistently high inflation since a long time, no improvement in the employment situation combined with weak and stagnating incomes. Of course, compared to the very bleak situation in July 2021, consumer perceptions of the current situation have improved. In July 2021, just 10% of the respondents had stated that their current economic situation had improved. That has more than doubled since with 21.6% of the respondents stating in July that their current economic situation has improved. While it is good news, there is nothing much to cheer for policy makers. That is because 63% of the respondents still think that their current situation has worsened. In act, many analysts are marvelling at how sales of consumer goods and services are showing a strong performance despite such widespread pessimism.
The answers perhaps lie in what consumers expect in the future. Here, pessimism clearly gives way to optimism, though worries about inflation, unemployment and income levels persist. Surveys conducted by C Voter since March 2020 have also shown this secular trend. While t was completely bleak in mid 2021, C Voter survey respondents started displaying optimism this year. It is the same with the bi monthly Consumer Confidence Survey of the RBI. While expressing their opinion about the future, 46.4% of the respondents-as shown n the second pie chart-have stated that their economic situation will improve in the future. In contrast, 38.8% were apprehensive that their economic situation will worsen while 14.9% of the respondents stated that it will remain the same.
To sum up, the Dian consumer is growing more confident, but is not confident that the economic situation has fundamentally changed or better.
