Consumers optimistic about the future as economy reboots, shows RBI survey

Individuals and firms are upbeat about their prospects in a 12 months’s time although they continue to be downcast concerning the present state of issues, separate central financial institution surveys discovered.

Consumer Confidence Index (CCI) for the present fiscal 12 months got here in at a measly 53.Eight factors in a Reserve Bank of India (RBI) survey, however jumped to 105.four factors for a 12 months forward. The survey was based mostly on responses from 5,342 households throughout 13 main cities.

The central financial institution mentioned whereas shopper confidence plunged in July this 12 months, with the present scenario index (CSI) recording its all-time low of 53.8, it returned to positive territory for the 12 months forward, indicating indicators of restoration.

Analysts mentioned the autumn in shopper confidence for the 12 months is a mirrored image of financial adversity. Millions of jobs have been misplaced and salaries slashed amid India’s harsh Covid-19 lockdown, however optimism is regularly returning with the easing of restrictions and the reopening of the financial system. Among key parameters, perceptions round employment, earnings and spending confirmed marked enchancment for a 12 months forward. Inflation remained within the unfavorable territory for the 12 months forward.

To ensure, whereas demand is predicted to enhance, most respondents reported a discount in discretionary spending within the final one 12 months although their total spending elevated; they don’t plan to extend non-essential spending within the coming 12 months both, the survey discovered.

“It is unlikely that demand will revive this year,” mentioned Madan Sabnavis, chief economist, Care Ratings Ltd. “There is a faint hope that the rural economy may boom because of a good harvest season. But the minimum support price has not been increased. If there is a good kharif harvest, prices may come down, so incomes may not increase and with more members in the family who have migrated back to their villages, per capita income will decline. So, in this uncertain environment, people will not spend,” he mentioned.

A second RBI survey of 802 firms discovered producers anticipated enchancment in manufacturing and orders within the second quarter; nevertheless, sentiments on jobs and exterior demand remained weak. Sentiments on revenue margins remained depressed for the quarter at the same time as outlook on the general monetary scenario confirmed optimism.

“Manufacturers polled distinct betterment in key demand indicators in Q3 sustaining through Q1 of FY22. Overall business situation is expected to gradually improve by Q1 of next fiscal” the survey mentioned.