Majority Citizens in Cities Claim Unimproved Economic Conditions: RBI Survey

The Reserve Bank of India (RBI)’s latest Consumer Confidence Survey (CCS) finds that majority of the respondents felt that their economic situation has neither improved nor is even expected to improve in the year ahead. A comparison of the data from the CCS conducted in the last four years, reveal increasing disillusioned mood among people under the NDA-led government.

The survey was conducted in June this year in which 5,264 households from metropolitan cities – Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, and New Delhi participated. They were asked questions about the general economic situation, the employment scenario, the overall price situation and their own income and spending. Therefore, the survey mainly puts forward the current perceptions and future expectations of citizens living in the cities.

According to the 2018 CCS survey, 42 per cent of the respondents felt that their general economic situation has worsened in the past one year (current perception), while only 34.6 per cent claimed improvement in this category. While 27.7 per cent said that their economic situation will worsen in the next one year, 48.2 per cent hoped for improvement. Four years ago, in June 2014, 39.9 per cent respondents surveyed had said that their economic situation worsened, that is, there has been a rise of about 2 per cent in the number of people who were unhappy with their economic situation after four years.

According to the latest survey, 40 per cent claimed that currently their employment scenario has worsened as against only 30 per cent respondents surveyed in June 2014. This year, 24.4 per cent are expecting that their employment conditions would worsen in the next one year, while only 10.1 per cent in the June 2014 survey.

Current Situation Index and Future Expectation Index

Current Situation Index (CSI) and Future Expectation Index (FEI) are two consumer confidence indices designed by RBI which are compiled on the basis of net responses on the economic situation, income, spending, employment and the price level for the current period and a year ahead, respectively.

The CSI remained in the pessimistic zone (below 100 points), a trend since December 2016, while the FEI recorded a marginal decline from 118.4 points in May 2018 to 117.8 points in June 2018.

While the two indices, CSI and FEI, were very close to each other until 2013 (see graph below), consumers or surveyed people have turned more confident about future from 2014. This suggests that although the urban citizens were optimistic in expecting improved living conditions for future, the gap between the indices remained to increase. The difference between the two indices in the June 2018 survey stood at 20.9 points with FEI at 117.8 and CSI at 96.9 points.

While CCS survey is confined to only urban citizens, with the increasing rural distress and suffering informal sector, experts are arguing that the people are increasingly growing disillusioned with the current regime of the NDA government.