Consumer confidence in India has collapsed with household incomes shrinking and a pessimistic outlook for employment and the economy, a Reserve Bank of India survey shows.
India imposed the world’s biggest lockdown on March 25, which shut down all economic activities. The RBI conducted the survey with 5,300 respondents across 13 major cities from May 5 to May 17.
The response of consumers showed the “current situation index” plunging to a historic low and expectations for the year ahead declining into pessimism. Consumers were gloomy on all fronts including getting jobs, incomes, price rises and the general economic situation.
India has the seventh-highest number of Covid-19 cases in the world. Of 227,029 people infected, 6,363 have died. The daily increase in the number of patients has been steadily rising from about 700 at the beginning of April to around 4,000 in May and more than 8,000 in June. Mumbai, Delhi and Chennai account for more than 40% of cases.
In May, 74.4% of people perceived that the general economic situation had worsened. In January, 55% said the same thing and in May last year, the figure was 37.7%.
The perception for next year was not as bad, but 51.4% of respondents said the situation will worsen. In May last year, the expectation for the year ahead worsening was just 20.9%.
More than two-thirds said the employment situation had worsened. Nearly half, at 47.4%, expected the job market to be worse until around the same time next year.
Of those surveyed, 53.4% felt that incomes would decline, compared with only 20.8% who thought this a year earlier.
However, overall spending will increase next year, according to 64.3% of those surveyed. Overall income rose in May, 56.1% of respondents said.
Spending on essential items will increase one year from now, according to 73% of respondents, while 69.3% of them feel their spending on essential items has risen.
Only 22% expect to spend more on non-essential items one year from now. At present, only 13.9% think they are spending more on non-essential items.
A big majority, at 73.4%, believes that inflation will be higher this time next year.