48% India's urban households say, economic situation worsening, highest since Dec 2016: RBI report

By Rajiv Shah
In a warning signal to the Government of India’s policy makers, latest Reserve Bank of India’s (RBI’s) Consumer Confidence Survey (CCS) for May 2018 has suggested that in six major metropolitan cities – Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi – 31.9% of households felt that there was an improvement in the general economic situation as against 45.7% in December 2016.
Worse, the percentage of households which felt the general economic situation in India has worsened has reached peak since December 2016 – it is 48% as against 30.7% in December 2016. In all, the RBI obtained responses from 5,077 households about perceptions and expectations on the general economic situation, the employment scenario, the overall price situation and their own income and spending.
Interestingly, those the percentage of households which feel that the economic situation has neither worsened nor improved, but has remained stagnant, has also gone down to 20.1%, lowest since December 2016, the earliest month for which the RBI has released data.
At the same time, the percentage of households which feel that the general economic situation would improve over the coming one year has down from 66.3% in December 2016 to 49.5% in May 2018. As those feeling that it would remain the same is up from 16.6% to 22.7%; and those who feel that it would worsen is up from 17.1% to 27.8%.

Coming to the perceptions on employment, the RBI data show that, while those feeling the situation has improved over the last two-and-a-half years has almost remained stagnant – it was 31% in December 2016 and is 31.5% in May 2018 – the percentage of find the situation worsening is up by five percentage points, from 39.2% to 44.1%. And, as for those feeling the situation has not changed is down from 29.8% to 24.4%.
Coming to the perceptions on employment over the next one year, those think that it would improve is down from 57.3% to 49.5% over the last nearly two-and-a-half years, those who think it would remain the same is almost stagnant at 24-25%, while those who think that it would deteriorate is up from 18.6% to 25%.
As for other indicators, those who feel that the price level price level has increased is up from 73.9% in December 2016 to 88.2% in May 2018; those who feel that inflation level would rise is up from 57.8% to 79.2% during the same period; and those who feel that incomes have increased has almost remained stagnant at around 27% over the last one-and-a-half years.
As for spending, those who feel that it has generally gone up has increased from 73.5% to 83.2%; those who feel that the spending on essential items has gone up is up from 76.9% to 85%; and those who feel that spending on non-essential items has gone up has also increased from 37.3% to 52.1%.
Taking an overall view of things, even as finding that there is a slight deterioration in the Consumer Confidence Index following the last survey, which was in March 2018, RBI comments, “Prices continued to remain a concern for households, and their outlook for the next year was largely unchanged”. It adds, “Households’ responses shifted towards similar or lower levels of expenditure, possibly reflecting pessimism on the perception and outlook on prices.”

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