Anecdotal evidence of threats to consumption, which is the backbone of the Indian economy, now has some statistical backing from a central bank survey. Consumers are increasingly cutting down on spending amid rising fears about job prospects, a Reserve Bank of India survey shows, foreboding a slowdown in Asia’s third-largest economy.
Consumer sentiment has taken a knock on the back of increasing worries about the economy and rising concerns about jobs, the survey showed. The Consumer Confidence Index dropped to 93.9 in the latest gauge from 94.8 in September, the RBI said.
India is grappling with a crisis in its shadow banking sector, which pushed up lending rates and hurt demand for goods just before the festival season. Even though there are tentative signs of a recovery in demand, the central bank survey painted a rather pessimistic picture for the future.
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“The future expectations index also moderated due to lower optimism on the employment scenario and household spending,” said the RBI survey, which covered more than 5,000 respondents over 13 major cities.
In perhaps the only bright spot in the survey, consumers also remained pessimistic about the price situation though their assessment for income growth improved.