Girls wearing masks shop in Jaipur. Markets have been busy despite people being wary of catching Covid-19. Photo: AFP / Bhagirath Basnet / The Times Of India

Indian consumers are feeling less optimistic about the present state of the economy, employment and the price of essentials and are not hopeful about the year ahead, as the second wave of Covid-19 threatens to derail any economic recovery.

The latest Consumer Confidence Survey by the Reserve Bank of India has found that the current situation index fell to 53.1 in March from 55.5 in January. According to the central bank’s yardstick, a measure of 100 is the dividing line between optimism and pessimism.

Sentiments on the general economic situation, income and prices have deteriorated from the previous survey. The latest figure is only marginally higher than the historic low of 49.9 in September last year.

As for the year ahead, the survey respondents were less optimistic than in January. The future expectations index fell to 108.8 in March, from 117.1 in January.

With higher essential spending than a year ago, most consumers reported higher overall expenditure, which is expected to increase further in the coming year despite continuing moderation in discretionary spending, the central bank said. Nearly 93.8% of those surveyed felt price levels had increased and 75% expected this trend to continue in the year ahead.

Rising inflation has put pressure on the central bank over interest rates. On Tuesday the bank retained the repo rate at 4% and the reverse repo rate at 3.35%. The monetary policy committee has now kept the key benchmark rates unchanged in the last four bi-monthly reviews.

The economic slowdown induced by Covid-19 has forced people to put off discretionary spending. This, in turn, impacted the demand for bank loans and business performance across sectors.

Nearly 58.5% of respondents felt spending on non-essential items had decreased and 29.5% felt it remained the same. For the year ahead, 37.1% of respondents felt it would decrease, while 38.3% felt it would remain the same.

As for employment in the country, more than three-fourth of respondents (75.3%) felt it had worsened and 36% felt it would worsen. However, 46.7% of respondents felt it would improve in the coming days.

A recent study by the US-based Pew Research Center showed that about 32 million middle-class Indians have been pushed into poverty due to job losses and loss of income caused by the coronavirus pandemic.


The central bank conducted field interviews from February 27 to March 8 in 13 major cities – Ahmedabad, Bangalore, Bhopal, Chennai, Delhi, Guwahati, Hyderabad, Jaipur, Kolkata, Lucknow, Mumbai, Patna and Thiruvananthapuram. About 5,372 households across these cities took part and the survey and gave their responses regarding perceptions and expectations on the general economic situation, employment, overall price situation and their own income and spending.