Analysis of RBI’s Consumer Confidence Survey, September 2021 -First Part
Rohit Kumar Parmar Free lance [1]
IES (Retd)
Former Senior Economic Adviser
Ministry of Consumer Affairs, Food and Public Distribution
Synopsis
Both the Current Situation Index (CSI) (19.4) and the Future Expectations Index (FEI) (39.6) reached peak levels in September 2016, which also corresponds to the peak growth rate of GDP (8.3) and Per Capita GDP (6.9) in the year 2016-17.
Both CSI and FEI decreased from September 2016 to September 2021, but the decrease in CSI by 76.8 percentage points from 19.4 to -57.4 is sharper and double the decrease in FEI.
I Introduction
Reserve Bank of India released results of the September 2021 round of Consumer Confidence Survey (CCS) on October 8, 2021, which appears to have not been reported in the mainstream media or the financial papers. [2] The CCS conducted since 2012 is carried out in 13 major cities, viz., Ahmedabad; Bengaluru; Bhopal; Chennai; Delhi; Guwahati; Hyderabad; Jaipur; Kolkata; Lucknow; Mumbai; Patna; and Thiruvananthapuram and covers Perceptions and Expectations in four areas - general economic situation, employment scenario, overall price situation and own income and spending, obtained from 5,237 households across these cities. The first part of the analysis covers Perceptions and Expectations of the general economic situation.
II Highlights of the CCS
The highlights of the CCS as reported are
I. Consumers reflected lower pessimism on the prevailing general economic situation, employment scenario as well as household income and expenditure; the current situation index (CSI) for September 2021 improved when compared with the earlier survey rounds conducted after May 2020 (Chart 1 and Tables 1, 2, 5 and 6). [3]
II. Consumer confidence for one year ahead period sustained the momentum witnessed in the July 2021 survey round; the future expectations index (FEI) improved further in September 2021, aided by higher optimism on general economic situation and employment scenario.
III. Households reported a rise in overall expenditure, largely due to higher expenditure on essential items; the pessimism on current and future discretionary spending, however, reduced in the latest survey round (Tables 7 and 8).
III Analysis of the Perceptions and Expectations on general economic situation
A separate annual and monthly analysis has been done for both CSI and FEI.
III.1 Annual CSI and FEI on general economic situation
Table 1 and Chart 1 of the annual Current Situation Index (CSI) and the Expectations, measured as the Future Expectations Index (FEI) follow
Both the annual CSI (19.4) and the annual FEI (39.6) reached peak levels in September 2016, which also corresponded to peak levels and growth rate of GDP (8.3) and Per Capita GDP (6.9) in the year 2016-17. [4] Interpreting the same, suggests a continuous deceleration/ decrease in the Indian GDP and Per Capita GDP alongwith CSI and FEI since 2016-17, which relates to the pre-covid period and is not attributable to it (Covid).
At the cost of repetition, GDP, Per Capita GDP (both level and growth rates) alongwith CSI and FEI need to reach the 2016-17 levels. Notwithstanding the out of context, official data blitzkrieg, India/Indians are poorer than they were in 2016-17. The resulting pessimism is aptly captured in the CCS. The decrease in CSI by 76.8 percentage points from 19.4 in September 2016 to (-) 57.4 in September 2021, is sharper and double the decrease in FEI by 38.1 percentage points from 39.6 in September 2016 to 1.5 in September 2021.
III.2 Monthly CSI and FEI on general economic situation
Both the monthly CSI (-57.4) and FEI (1.5.) in September 2021 are lower than the pre-covid level of CSI (-23.9) and FEI (15.1) in March 2020. Interpreting the same, suggests an expected deceleration in the Indian GDP and Per Capita GDP alongwith CSI and PEI since March 2020. In the monthly data also, the decrease in CSI by 33.5 percentage points from (-) 23.9 to (-) 57.4 is sharper and more than double the 13.6 percentage points decrease in FEI from 15.1 to 1.5 in the same period. Sudden imposition of lockdown on March 25, 2020 and the associated loss of economic activity, jobs and incomes explains a large part of the decrease.
Annexure A
Google search of the Consumer Confidence Survey (CCS) on October 8, 2021 on 10.10.2021 at 653 AM showing no results
[1] Author has in posts on his website (https://rohitkparmar.wixsite.com/site), twitter (https://twitter.com/rohitkparmar?s=09), facebook (https://www.facebook.com/rohit.parmar.5268750/), linkedin (https://www.linkedin.com/in/rohit-kumar-parmar-841b4724) been writing on varied topics and the impact of Covid and can be reached at rohitkparmar@yahoo.com. [2] Google search of the Consumer Confidence Survey (CCS) on October 8, 2021 on 10.10.2021 at 6.53 AM shows no media results (Annexure A). [3] The tables/Charts referred maybe accessed from the RBI, available at link https://www.rbi.org.in/Scripts/BimonthlyPublications.aspx?head=Consumer%20Confidence%20Survey%20-%20Bi-monthly [4] Details of the same can also be read in https://rohitkparmar.wixsite.com/site/post/india-s-economic-financial-and-social-performance-an-analysis-of-reasons-for-pre-and-post-covid
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