The confidence of consumers, devastated by the second wave of COVID-19, has dipped to a new low and 81.4% of the respondents have said that the general economic situation has “worsened”, a new survey by the Reserve Bank of India has said.
As the pandemic continues to adversely hit lives and businesses across the country, 82.1% of the respondents said the employment situation had “worsened”.
The RBI released the results of the May 2021 round of its Consumer Confidence Survey to understand perceptions and expectations on the general economic situation, employment scenario, and overall price situation by conducting telephonic interviews with 5,258 households across 13 major cities, including Bengaluru, from April 29 to May 10.
Overall pessimism
Respondents were also bleak in their view of the year-ahead prospects, with 51.5% saying the general economic situation would “worsen”, while only 33.2% predicted the situation would improve. As many as 15.3% said the situation would remain the same.
“The future expectations index moved to pessimistic territory for the second time since the onset of the pandemic; this was driven by sharp fall in expectations on the general economic situation, employment scenario, and household income over a one-year horizon,” the RBI said.
In one-year ahead prospects on employment scenario, 35.4% of respondents said the situation would improve and 16.1% said the situation would remain the same. However, a majority of the respondents (48.5%) said the employment situation “will worsen”.
About the price level, an overwhelming response (90.6%) was that prices have increased. On one-year ahead expectations, 73.9% respondents said prices would increase, the survey found.
In a separate inflation expectations survey of households by the RBI, 60% of the respondents said they predict higher inflation over the next three months and over the next one year.
Income scenario
On the income scenario, 58.5% of the respondents said their incomes had decreased and 42.5% said their income would increase in the next one year. About 42% said their income would remain the same.
On spending, 50.6% said their spending had increased and it was largely on essential items (63.2%).
Household spending was reduced largely owing to consumers’ concern about the economic situation and job prospects, the RBI survey found.