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CONSUMER CONFIDENCE AND ELECTIONS

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With a huge election season on the cards leading to the general elections in 2019, political parties and their advisors are desperate to judge the mood to the electorate. All kinds of voter surveys are conducted by these parties. The voter mood is best reflected in the consumer confidence surveys, because there is a direct correlation between the happiness and confidence of the consumer and the chances of him voting for the party in power. If a consumer is confident and has a positive outlook to the future, it means that the government policies have facilitated his wellbeing, welfare and prosperity and that there are bright chances that he will vote for the party in power. A consumer who is not confident about his own earnings prospects and future, will certainly vote in a new political party in power. The level of the consumer’s confidence and positive outlook, thus provide a ready benchmark of voter satisfaction, mirroring the efficacy of the government policies.

The Indian consumer is well informed and aware and no amount of spin doctoring of statistics by the authorities can fool him. If the government claims that the GDP is growing rapidly, but if that is not getting reflected in growth in household income/prosperity, it does not convince the iindependent-mindedIndian consumer. There is often thus, a disconnect between government claims of economic performance and what a consumer thinks. In India, the Reserve Bank of India conducts credible consumer confidence surveys from time to time. These surveys help to gauge the direction of the Indian economy, because a confident consumer generally buys more goods and services, which gives a boost to national growth. To reiterate, these findings are also a barometer of how many people are happy with the government policies and its management of the economy, and will thus vote for it or not.

The findings of the RBI consumer confidence surveys, conducted in September 2018 are interesting, particularly when you compare them with those of its similar survey in December 2013, when too the nation was entering the poll season. In this survey 35.2% of those surveyed said that their employment prospects had improved, while 45.5% said that they had worsened. The net response is thus negative and is incidentally much worse than what it was in December 2013. It means that the consumers are largely nervous and jittery about the direction of the economy, reflecting dissatisfaction with the government. Further, while 28.3% said that their income had risen, 23.4% said that they had gone down. The net difference is again much worse than what is was in December 2013. The consumer response to inflation is much better than what is was in December 2013 and so is the overall consumer confidence index.

The RBI survey however has its limitations. Since it is conducted only in six big cities of India, it does not reflect the consumer perception in the small town and villages, which is where the real India is. The overall optimism of the consumer however remains. A large majority said that they expect that their job prospects and income will improve, which is much more than what they expected in December 2013. It looks like the consumer mood of optimism and expectations will stabilise the vote of the consumer in favour of the NDA in power.

 

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