Much as the government is eager to portray a rosy and bright picture of the Indian economy,
as the nation heads to general elections next year, the ground reality points to another
direction. The revelations of the latest Reserve Bank survey on consumer confidence in India,
do not support the government’s contentions and point to an opposite direction. In the survey,
which is conducted in the six metro cities viz. Hyderabad, Bangalore, Chennai, Kolkata,
Delhi and Mumbai, more than half the respondents said that they do not expect any
improvement in their income, their employment prospects and their general economic
condition in the next twelve months. Only 48.2% of the respondents believe that their
economic conditions will improve in the year ahead and 27.7% think to the contrary, that
their economic conditions could worsen further. Further, while 49.1% think that their job
prospects will improve, about 25% actually expect that their job prospects will worsen on the
other hand. About 42% of the respondents said that during the last year, general economic
conditions had worsened, while 34.6% thought that they had improved. The overall
perception of the respondents to the survey is one of uncertainty and anxiety.
The findings of the RBI survey contrast with the recent figures of infra sector growth, which
has touched a seven month high of 6.7% in India. These figures represent the growth in eight
core segments like oil & gas, coal and power, which constitute 40% of India’s industrial
output. If the industry is recording an upward growth momentum, then why is it that
consumer confidence in India is waning. The onset of industrial growth always boosts
consumer confidence, which is missing at the ground level.
The reasons for such a mismatch could be many. It could be that the benefits of industrial
growth have not percolated to the consumer level. It could also be that the RBI survey which
is conducted only in six metro cities reflects the situation only in those metros and does not
represent the overall state and mood of consumer confidence in India. It certainly does not
factor in the consumer mood in smaller cities/towns and also completely bypasses rural India.
The general perception is that there is distress in the rural and informal sector and if that is
factored into the findings of the RBI survey, then the consumer confidence figures might
sharply dip further.
Consumer confidence is a perception that emerges from the gut of the common man,
unaffected by political claims. With jobs being difficult to come by, inflation inching up, and
the informal economy of India in a despondent state, the consumer confidence is bound to be
low, moreso particularly where the public opinion of the government is that it promises a lot,
but in reality, delivers little.