Consumers reflected lower pessimism on the prevailing general economic situation, employment scenario as well as household income and expenditure, says RBI in its September 2021 round of the survey. People are optimistic about spending.
The survey data shows that the current situation index is the highest since May 2020 and the future index is highest since November 2020. Several indicators, since the lifting of restrictions after the second COVID wave, show a robust recovery. Indications are that the economy is expected to grow at near double digits in 2021-22.
As such, the RBI expects growth to be around 9.5% in the current fiscal year and also expects inflation to moderate with the arrival of bumper crops. However, the central bank has downplayed the impact of hardening crude prices and domestic prices, and their impact on prices.
The survey showed that consumer confidence index improved to 57.5% in September from 48.6% in July. Consumer confidence for the one-year ahead period also improved and the future expectations index moved to 107 in September from 104 in July. Moreover, consumers showed lower pessimism about the prevailing general economic situation, employment scenario as well as household income and expenditure. As such, the current situation index for September brightened when compared with the earlier survey conducted after May 2020.
Future expectations are reflected in the consumer confidence for one year ahead. It improved further in September from July 2021, aided by higher optimism on the general economic situation and employment scenario. Households reported a rise in overall expenditure, largely due to high expenditure on essential items. The pessimism on the current and future discretionary spending reduced in the latest survey.
Furthermore, RBI’s latest monetary policy report highlights that domestic economic activity is normalizing after the ferocious second wave of infections. “The outlook remains overcast by the future path of the pandemic, the accelerated pace of vaccination and release of pent-up demand provide an upside to the baseline growth path. Headline inflation has fallen back into the tolerance band and the trajectory is expected to be driven by supply-side factors.”