New Delhi: According to the Reserve Bank of India (RBI)’s latest consumer confidence survey, Indian consumers’ confidence in the general economic situation and the employment scenario seems to be quite low. In fact, it dropped to a six-year-low in September 2019.
The report also suggests business climate in September quarter was the worst since the 2008 financial crisis, according to the quarterly surveys by the Reserve Bank of India (RBI). The survey was conducted in 13 major cities, among 5,192 households.
Giving out details in the report, the central bank said activity contracted in Q2 FY20, the first contraction since 2013-14 and the second since the global financial crisis. In terms of statistics, order books of manufacturing companies contracted by 23 per cent in the June quarter (Q1 FY20), the steepest drop since the 2008 financial crisis, said the quarterly survey findings.
The depression was also carried forward from the previous quarters as economic growth dropped to a six-year low of 5 per cent in the same quarter. In the same quarter, capacity utilisation in the industry also dropped to 73.6 per cent, down from 76.1 per cent in the previous quarter. This was the lowest since post-demonetisation cutback in capacity use by the industry.
The Business Assessment Index, which denotes qualitative assessment of the business climate by manufacturing companies, dropped to the lowest since the crisis. Business expectations were also subdued.
“Respondents assessed that there was a slump in order inflows, output and employment conditions in Q2 FY20. On exports and imports, there was waning optimism,” the industrial outlook survey said. Cost pressures on interest payments and salaries had softened, profits margins would still remain weak. Experts said this trend is strange and worrisome.
Consumer confidence weakened in the September quarter while households were generally less optimistic on their income over the year ahead, according to the RBI surveys.
Meanwhile, a survey of the professional forecasters showed that real gross domestic product (GDP) was likely to grow at 6.2 per cent in 2019-20 and 7.0 per cent in 2020-21. These are lower than previous estimates.
