Based on an RBI survey in Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi, it has been found that consumer confidence has been falling steadily since May 2017.
The RBI’s Consumer Confidence Index fell to a 4-year low of 91.1 in November 2017. The index was lower than this in September during the Fed taper. Based on an RBI survey in Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi, it has been found that consumer confidence has been falling steadily since May 2017. If the index is above 100, it denotes optimism, otherwise pessimism.
The results of the survey fit in with the GDP data for the September quarter, which showed private consumption growth was the lowest in the last eight quarters.
One of the main reasons for such low consumer confidence is the perception about employment prospects. The net response, which is the percentage of people who say employment prospects have improved minus the percentage who say prospects have worsened, is now lower than even during the depths of the taper tantrum, in September 2013.
The net response has been negative since December 2016, which means that those who think employment prospects are worsening outnumber those who believe they are improving. What’s more, the negative net responses have been increasing. Clearly, demonetisation and the GST have had an adverse impact on employment.