RBI SURVEY – PEOPLE TURN PESSIMISTIC

By Ruma Dubey

RBI did not have good news for Modi.

In a survey released by RBI on 6^th June, and the overall tone was “pessimistic.”

As we wait for IIP and retail inflation data to be released tomorrow and the all-important Fed meet on the 13^th, the findings of this survey would probably be the best thing to have a quick read about; more than all this data, globally, Kim and Trump will dominate everything else.

The underlying theme of this survey was that the perception for the current scenario is pretty pessimistic but the outlook for the future is expectation of an improvement. Exception to this was inflation where even the future, people do not expect it to get better. The RBI has made it explicitly clear – these are the results of a survey and are in no way to be construed as those of RBI. That’s that!

The Consumer Confidence Survey was conducted in six metropolitan cities - Bengaluru; Chennai; Hyderabad; Kolkata; Mumbai; and New Delhi - and obtained 5,077 responses on households’ perceptions and expectations on the general economic situation, the employment scenario, the overall price situation and their own income and spending.

What the survey shows:

Level of consumer confidence in May 2018 was almost similar to that in March 2018; while the current situation index (CSI)2 slid down by one point into the pessimistic zone.

48 per cent of the respondents felt that the general economic situation had deteriorated

Households remained pessimistic about the current employment situation.

Prices continued to remain a concern for households

Perceptions regarding their current income turned positive with an improvement of around 5 percentage points

Majority of the respondents felt prices will increase over the next three months and also a year

And in terms of forecast for the future macroeconomic indicators, growth is expected to firm up in 2018-19 and 2019-20 on the back of higher private consumption and investment.

Consumer price inflation is expected to remain below 5.0 per cent from Q2:2018-19 to Q4:2018-19.

The current account deficit (CAD) is expected to remain at 2.4 per cent of GDP for both in 2018-19 and 2019-20.

Rupee – US Dollar Exchange rate for Q1FY19 is estimated at a maximum of 68.50 and minimum of 64.40. For Q2FY19, is estimated at maximum of 70 and minimum of 63.80.

Crude Oil (Indian basket) price (US $ per barrel) is estimated at a maximum of 78 and minimum of 64.40. For Q2FY19, is estimated at maximum of 77 and minimum of 63.80.