The share of urban consumers who were pessimistic about the Indian economy continued to decline in January 2023 though more than half of them said the situation has worsened compared to a year ago.
Chart 1A shows the responses from a Reserve Bank of India (RBI) survey conducted across 19 major cities between January 2 and 11. When asked to comment on their current perception of the economic situation, 52.1% said it has worsened. This is the lowest share since the pandemic outbreak. Still, the share was significantly higher than the 28.3% who said the economic situation has improved (not plotted on the graph).
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Chart 1B shows that 49.9% of the 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. Due to the economic slowdown in 2019 and the pandemic that followed, a majority had remained pessimistic since July 2019, but that 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 pandemic outbreak but is still considerably higher than the pre-pandemic levels.
Worryingly, close to 94% of the respondents continued to say that price levels of commodities have increased (Chart 1D ).
Though optimism is yet to return to pre-pandemic levels, the degree of pessimism about the economy, jobs and income levels has declined. High prices, though, are still a sore point.
Chart 2 shows the growth in new orders received by 800 manufacturing companies surveyed by the RBI. The quarter-on-quarter growth of new orders received turned negative in Q2FY23 (July-September 2022) after being in the positive for four straight quarters.
Chart 2 also shows the response to a survey conducted in 1,356 manufacturing companies about their order books. The graph shows the share of companies which said new orders had increased. Only 33% said their order books had increased in the latest quarter.
Chart 3 shows the results of the RBI’s survey that capture the growth in the services and infrastructure sectors. The latest data 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 points to a higher share of companies recording an increase in turnover and vice-versa. The chart hints at a recovery in the turnover of both the service and infrastructure sectors. In the latest period, 49.2% of service sector companies reported that their turnovers had increased, 45.2% reported that there was no change and only 5.5% said their turnovers had decreased. So, the net response was +43.7% points. This was much higher than the pre-pandemic levels. A similarly positive net response was reported by the infrastructure firms.
Chart 4 plots the results of RBI’s quarterly bank lending survey. Senior loan officers were asked to assess loan demand. The latest data are for October-December 2022. The chart the plots net response. The demand for loans in the agriculture, manufacturing and retail sectors recorded a downturn while showing a major uptick in the service sector and an increase in the infrastructure sector. So, while the service and infrastructure sectors are firmly on the recovery path with the demand for loans continuing to grow, there are some hiccups in the manufacturing sector.
Source: Reserve Bank of India
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