Consumer sentiment continues to be grim

The last time the future expectations index in RBI’s Consumer Confidence Survey fell was during the March 2021 and May 2021 rounds, which coincided with the beginning and peak of the second wave of Covid-19 infections.

Published on: Feb 11, 2022, 16:45:41 IST

By Roshan Kishore

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NEW DELHI: Consumer sentiment will continue to be an impediment to achieving a sustained high growth path for the Indian economy, if the findings of the latest round of RBI’s Consumer Confidence Survey (CCS) are any indication.

RBI’s Consumer Confidence Survey is conducted in 13 major Indian cities and captures the mood in urban areas (REUTERS File Photo)

CCS is conducted in 13 major Indian cities and it, therefore, captures the mood in urban areas. The latest round of CCS was conducted between January 2-11. This means that it coincided with the beginning of the third nationwide wave of Covid-19 infections.

The fact that there was a third wave of the pandemic in India seems to have played an important role in shaping future sentiment. The CCS asks respondents about their perception of the current situation (compared to a year ago) and their expectation about the situation a year from now.

While the Current Situation Index (CSI) in the CCS has improved marginally between the November 2021 and January round, the future expectations index (FEI) has actually fallen compared to the previous round. The last time the FEI fell was during the March 2021 and May 2021 rounds, which coincided with the beginning and peak of the second wave of Covid-19 infections. It is to be expected that every new wave brings with it the fear that there could be another wave, which, in turn, gives rise to the perception that a complete normalisation of the economy may be delayed even further.

To be sure, even CSI continues to be significantly below pre-pandemic levels. The latest reading of CSI was 63.7. CSI was at 85.6 in March 2020. The CSI value is calculated by adding 100 to the average of net responses – the difference between those who report an improvement and worsening – on various metrics tracked in the CCS. This means that for any value lower than 100, the share of respondents who reported a worsening will be greater than those who reported an improvement.

ABOUT THE AUTHOR
Roshan Kishore
Roshan Kishore is the Data and Political Economy Editor at Hindustan Times. He heads the newsroom's data journalism team, which produces Number Theory, a daily data-driven feature for the print edition and the HT app. Number Theory uses data analysis and story-telling based on it to add value to the newsroom’s daily coverage by putting stories in a larger context on a range of issues, including politics, macroeconomy, markets, global affairs and climate. Under his leadership HT’s data journalism work has established itself as a niche product in Indian journalism and pushed the boundaries of marrying academic rigour with news sense and speed. Along with writing and editing data stories, he has also been writing a weekly political economy column called Terms of Trade for HT Premium. A trained economist with an MPhil degree from Jawaharlal Nehru University, Kishore has also been a visiting fellow at the Centre for Advanced Studies of India (CASI) at the University of Pennsylvania. Along with his journalistic work, his writings have also appeared in journals such as the Economic and Political Weekly and working papers for CASI and UNESCAP.Read More

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