As India continues to report a rise in the number of coronavirus cases and amid an economic fallout of the same, the consumer confidence in August has slipped further. “Consumer Sentiment has dipped in August 2020 by 1.6 percentage points,” according to the monthly Refinitiv-Ipsos Primary Consumer Sentiment Index (PCSI) for India. While the government has lifted lockdown restrictions, economic activities have not started with full force and smooth functioning of industries, establishments, offices remain hampered. “The ongoing pandemic and the ad hoc/ short duration lockdowns have severely impacted the smooth functioning of establishments, staving off jobs by hundreds and thousands. While the economy is on a painful and long drawn rebound, job creation is the biggest challenge facing the nation,” Amit Adarkar, CEO, Ipsos India.
In fact, if the job situation is not handled immediately, the same will be a further deterrent to consumer sentiment which reflects consumer expectations on the economy, employment confidence, personal and financial conditions and investment climate. “Absence of some rebound on job creation front would lead to further lowering of the sentiment in future. Confidence in the economy is somewhat shaky and rising inflation is not making things easy. We need more jobs, definitely, on a war footing, even as we fight the virus,” Amit Adarkar added. Many companies laid off employees in the midst of the pandemic amid dwindling revenues and drop in sales.
In July 2020, consumer confidence plummeted, with the current situation index (CSI) hit an all-time low. Consumer confidence also reflects the likelihood of consumers to spend. According to the Reserve Bank of India survey, most respondents said that they have reduced their discretionary spending, though their overall spending increased during the last one year. In the current economic circumstances, consumers do not expect to increase non-essential spending in the coming year as well. The major setback to consumer confidence has been a result of prevailing economic situation, employment scenario and lower incomes.