Urban India’s confidence in the economic situation of the country has dwindled again in March after little improvement in December while it has remained in “pessimistic zone since March 2017”, a recent survey by the Reserve Bank of India has shown. Urban consumers have expressed negative sentiments and a further deterioration on fronts such as the general economic situation and the employment scenario. And while the situation is expected to improve in next one year — just ahead of 2019 Lok Sabha polls — it would still not be as optimistic as it was in the first couple of years after Narendra Modi came to power.
It can be recalled that one of the first disruptive economic moves by the Prime Minister came in form of demonetisation in November 2016, whose impact began surfacing in the next year 2017. And while the country’s GDP slumped from 8.2% in FY16 to 7.1% in FY17, another disruptive move, the implementation of the Goods and Services Tax scarred the economy further. Even as economists and analysts are optimistic about the GST regime, the urban consumers still have their doubts, the March 2018 round of RBI’s Consumer Confidence Survey conducted in six metro cities showed.
“Respondents continued to express concern about the current employment situation, and the outlook for the year ahead was less positive than in the previous round,” the RBI said in the survey report.
Urban consumers’ sentiments were negative and deteriorating about the economic situation, income, employment, and price levels, while sentiments were positive with signs of deterioration only for spending. The future expectations show a better consumer sentiment but followed a “similar trajectory”.
“Households’ current perceptions on the general economic situation dived sharply from the neutral level polled in the last round (in December 2017),” the RBI said.
The quarterly consumer confidence survey data since December 2012 show that sentiments of urban India remained in the optimistic zone after Narendra Modi became the Prime Minister in May 2014 until March 2017. The last time it was in the optimistic zone was June 2013, after which it dived until the new NDA government was formed.
The survey was conducted in six metropolitan cities – Bengaluru; Chennai; Hyderabad; Kolkata; Mumbai; and New Delhi – and obtained 5,297 responses on households’ perceptions and expectations on the general economic situation, the employment scenario, the overall price situation and their own income and spending.