Jobs big worry as economy remains in 'pessimistic zone', show RBI surveys

A series of surveys conducted by the Reserve Bank of India (RBI) have indicated that the present perception of households on the general economic situation remains in the pessimistic zone and is likely to worsen.

The RBI's Consumer Confidence Survey says the response to the current perception of the general economic situation showed 34.6 percent as "improved" as of September 2017, down from 44.6 percent in September 2016.

The RBI surveys show that more people see consumer confidence declining, business sentiment in manufacturing dipping, inflation on the rise and growth sliding. These findings are in sync with RBI's recent decision on October 4 to slash the growth forecast to 6.7 percent from 7.3 percent for fiscal 2017-18.

According to the survey, 40.7 percent of the respondents said that the economic situation has worsened in September 2017 as compared to 25.3 percent who had felt so, in September 2016.

When it came to "one-year ahead expectation", 50.8 percent respondents said the situation "will improve", as compared to 66.3 percent respondents in December 2016.

The 'Consumer Confidence Survey' was conducted in six of India's metropolitan cities, namely Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi. Around 5,100 responses were obtained on household perceptions and expectations on the general economic situation in the country, employment, overall price situation and their income and spending.

The RBI said that "the Current Situation Index (CSI) - a sub-index of the RBI’s consumer confidence survey that measures overall consumer sentiments toward the present economic situation - slipped further into the pessimistic zone, reflecting deterioration in sentiments on the employment scenario, the price level and income."

When it comes to employment, about 43.7 percent respondents believed that the current perception about employment has "worsened". That has grown from what was 31.4 percent in November 2016.

The response on the price level was also pessimistic. However, the respondents' outlook on inflation has softened in the last two survey rounds.

The income level perception has also come down to 26.6 percent in September 2017, from what was 37.3 percent in November 2016. However, despite the gloomy sentiments on income level, more than 80 percent respondents said that they had increased spending over the last year, which could also be partially because of higher prices.