Construction: Workers involved in diamond cutting in a company | Photo Credit: Mohammad Arif
The share of urban consumers pessimistic about the Indian economy continued to decline January 2023 However, more than half of them said the situation has worsened compared to a year ago.
chart 1a Shows responses to a Reserve Bank of India (RBI) survey conducted between January 2 and January 11 in 19 major cities. When asked to comment on their current perception of the economic situation, 52.1% said it has become worse. This is the lowest share since the outbreak of the pandemic. Nevertheless, the share was significantly higher than the 28.3% who said economic conditions had improved (not plotted on the graph).
Charts appear incomplete? Click To remove AMP mode
chart 1b Shows that 49.9% respondents were pessimistic about their current employment scenario. Notably, in the last two survey editions – November 2022 and January 2023 – the share has remained below the 50% mark. The majority remained pessimistic since July 2019 due to the economic slowdown in 2019 and the pandemic that followed, but this trend has changed.
chart 1c shows that 29.6% of the respondents were pessimistic about their current income levels. This is the lowest share since the outbreak of the pandemic, but is still well above pre-pandemic levels.
Worryingly, nearly 94% of the respondents continued to say that the price level of commodities had increased ( chart 1d ,
While optimism has still not returned to pre-pandemic levels, the degree of pessimism about the economy, jobs and income levels has declined. However, the high prices are still a sore point.
chart 2 The new orders received by the 800 construction companies surveyed by RBI shows a rise. The quarter-on-quarter growth of new orders received turned negative in Q2 FY2023 (July-September 2022) after being positive for four consecutive quarters.
Chart 2 also shows the responses to a survey conducted among 1,356 manufacturing companies about their order books. The graph shows the share of companies that said new orders increased. Only 33% said their order book grew in the latest quarter.
chart 3 Shows the results of the RBI survey that captures growth in the services and infrastructure sectors. The latest figures are for October-December 2022. In the survey, 1,091 companies were asked to comment on their turnover. The chart plots the net response – the difference between those who said it had increased and those who said it had decreased. A positive number indicates a higher proportion of companies reporting growth in turnover and vice versa. The chart indicates recovery in business of both service and infrastructure sectors. In the latest period, 49.2% of service sector companies reported an increase in their turnover, 45.2% reported no change and only 5.5% reported a decrease in their turnover. So, the net response was +43.7% points. This was much higher than the pre-pandemic level. A similar positive net response was reported by infrastructure firms.
chart 4 Plots the results of RBI’s quarterly bank credit survey. Senior loan officers were asked to assess the loan demand. Latest data are for October-December 2022. The chart shows the net reaction. Credit demand to agriculture, manufacturing and retail sectors declined, while the services sector saw a sharp rise and the infrastructure sector grew. Therefore, while the services and infrastructure sectors are firmly on the recovery path, with credit demand continuing to pick up, the manufacturing sector is facing some headwinds.
vignesh.r@thehindu.co.in
Source: Reserve Bank of India
Read also:India must avoid becoming a dystopia