Consumer confidence plummeted in July 2020 with the current situation index (CSI) recording its all-time low. The future expectations index (FEI), however, charted back into the positive territory, indicating signs of recovery for the year ahead, according to the latest Consumer Confidence Survey conducted by the Reserve Bank of India.
As per the survey, consumer perception of the prevailing economic situation, employment scenario and own income was significantly lower than that in May 2020. Respondents were, however, somewhat optimistic about these parameters for the coming year vis-a-vis the previous survey round.
Most respondents reported reduction in discretionary spending, though their overall spending increased during the last one year. They do not expect to increase non-essential spending in the coming year as well.
In view of the Covid-19 pandemic, the July 2020 round of the RBI’s Consumer Confidence Survey (CCS) was conducted through telephonic interviews during July 1-12, 2020 in thirteen major cities, viz., Ahmedabad, Bengaluru, Bhopal, Chennai, Delhi, Guwahati, Hyderabad, Jaipur, Kolkata, Lucknow, Mumbai, Patna, and Thiruvananthapuram.
Commenting on the RBI’s Consumer Survey, financial experts said that India’s consumer confidence dipping to an all-time low in July revealed by the RBI’s latest survey reflects the overarching uncertainties brought about by the Covid-19 crisis. The rising caseload as well as social and economic restrictions have caused considerable hardship and anxiety.
“These sentiments are also in complete alignment with the findings of the BankBazaar’s annual Aspiration Index survey released in July which clearly showed how the Covid-19-fuelled economic uncertainties have forced the respondents to re-prioritise their critical life goals. And while the overall Aspiration Index dropped to 79.9 in 2020 compared to 86.9 in 2019, Health emerged as the most important life goal for the respondents, above traditional leaders like the aspiration to buy a home or finance their children’s education,” said Adhil Shetty, CEO, BankBazaar.com.
However, “I feel people should channelise their anxieties over the prevailing situation to take the necessary steps to improve their financial health so that they can emerge out of this crisis with minimum damage. These include ensuring they have adequate life and health insurance coverage by purchasing or topping-up their existing plans and utilise any additional savings due to the lockdown to increase the size of their contingency funds. These steps would boost their financial immunity to tackle any unexpected financial challenge more effectively while minimising their reliance on an unplanned loan,” he added.