Consumer confidence plunged to record low in the month of September due to further worsening in the general economic situation and employment scenario in wake of coronavirus-led nationwide lockdown, according to an RBI survey. The Indian households remained pessimistic about the current economic environment, but they were more confident about the situation in a year's time.
The consumer confidence index (based on the current situation) recorded its third successive all-time low of 49.9 in September as compared to 53.8 in July and 63.7 in May. "The current situation index (CSI) recorded its third successive all-time low, as the respondents perceived further worsening in the general economic situation and employment scenario during the last one year," the survey report said.
More respondents reported curtailment in both overall and essential spending during the past one year, when compared with the last survey round. Consumers, however, expect improvements in economic situation, employment conditions and income scenario during the coming year. Discretionary spending, however, is expected to remain low in the near future, as per the survey findings.
The survey report is compiled on the basis of net responses on the economic situation, income, spending, employment and the price level for the current period and a year ahead, respectively. It was conducted across 5,364 households in 13 major Indian cities.
Another survey of the manufacturing sector showed that capacity utilisation across the industry fell sharply during April-June quarter of the current fiscal as domestic economic activity was impacted severely by lockdown imposed during the period to contain the spread of the COVID-19 pandemic. Industry's capacity utilization fell from 69.9 per cent in March quarter of FY20 to 47.3 per cent in June quarter of FY21. The survey, which provides a snapshot of demand conditions in India's manufacturing sector, was done on 462 manufacturing companies.
Meanwhile, surveys on households' inflation expectations showed that it remained elevated for both three months and one year periods. Indian households' perception of current inflation and expectation for inflation over the next three months were, however, a shade lower than that in the previous round of the survey.
Most households expect general inflation to increase over the three months and one year periods, but the share of respondents expecting higher food inflation over the next quarter declined in comparison with that in July 2020, the report noted.