Sanguine amidst slowdown (Indians are confident despite poor conditions)

Excellent study material for all civil services aspirants - begin learning - Kar ke dikhayenge!

 Sanguine amidst slowdown (Indians are confident despite poor conditions)

---

Read more on - Polity | Economy | Schemes | S&T | Environment

---

• Satisfactory growth rate : In India, the GDP growth rate considered good has gone from 8% p.a., to 7% now. Is it because the per capita income went up? That is surely not so, as we are a lower-middle income nation.
• Our perception : What changes is how Indians perceive growth. If incomes grow, then discretionary spending also grows. Reverse is also true.
• Consumer expectations : Aspirations and social norms also control economic behavour. Synchronised waves of optimism or pessimism can determine economy's direction. So asking consumers about their expectations makes sense.
• Ability versus willingness : Incomes show the ability to spend, but discretionary spendings depend on how consumers perceive the future.
• Two Surveys : The RBI Consumer Confidence Survey (since 2010) and the CMIE Consumer Sentiments Survey (part of CPHS - Consumer Pyramids Household Survey) (since 2016) are two reliable ones. [RBI survey is based on 5451 respondents in 13 towns, and CMIE CPHS is based on 40000 from 300 towns and 3000 villages.]
• Positive sense : Both surveys show that in 2018, a rising proportion of Indians felt that their incomes will go up in next one year. RBI survey found in end-2017 that a net 34% expected a rise, while in end-2018 a net 57% expected a rise. But both surveys had shown pessimism regarding jobs. (so jobs not optimistic, but incomes optimistic?)
• What about 2019 : A decline in this began from Q1 of 2019 (RBI), and Q2 of 2019 (CPHS). 
• Bad news and good news : Bad news during consistently bad times is not newsworthy. Good news during such times changes perceptions fast. The one-time cash transfers in 2018 may have been that push.
• 2019 good news : A large number feel both jobs and incomes will improve in coming one year. How is that linked to "a willingness to increase spending on discretionary items"? (non-essential items) The RBI Survey predicted the automobile sector slowdown clearly. 53% households in mid-2018 expected to spend more on non-essentials, a number that dropped to just 15% by July 2019. The CMIE survey got a positive result for general consumer goods (domestic appliances).
• Actual situation : Slowdown exists in automobiles, but not in broader consumer goods. So different parts of Indian economy are going in different directions, but households are hopeful that the future is about more incomes and better jobs!
• Summary : Consumer confidence surveys show that expectations of better incomes and jobs exist in India, and that different segments of the economy are moving differently.

Read more on - Polity | Economy | Schemes | S&T | Environment

Join UPSC Self Prep course | Online Course (PT Gurukul)  | Covid Special Course | Join PT courses

* Content sourced from free internet sources (publications, PIB site, international sites, etc.). Take your own subscriptions. Copyrights acknowledged.