Consumer confidence in India has reached its highest level since mid-2019, according to a recent survey by India’s central bank, the Reserve Bank of India (RBI). The survey findings, released on Friday, indicate a sustained recovery in consumers’ confidence regarding the current economic situation. Sentiment surrounding both the general economic conditions and employment opportunities has improved.
Notably, the “future expectations index,” which gauges consumer sentiment for the upcoming 12 months, has also climbed to its highest point since mid-2019. This positive outlool shows that consumers are optimistic about theie economic prospects in the near future.
Corroborating the RBI’s findings, the monthly LSEG-Ipsos Primary Consumer Sentiment Index (PCSI) showed a 2.8 percentage point surge in consumer sentiment among urban Indians in March 2024.
The Indian economy is projected to maintain a robust growth rate of 7% in the 2025 fiscal year, as stated by the central bank on Friday. However, the RBI opted to keep interest rates unchanged, pending a moderation in inflation towards its target of 4%.
A separate survey on household inflation expectations revealed that consumers anticipate inflation to ease from current levels, further bolstering consumer confidence.
The data also highlighted an increase in capacity utilization in the manufacturing sector, rising to 74.7% in the October-December 2023 quarter, up from 74% in the previous quarter. This uptick in capacity utilization is a positive signal for investment activity.
RBI Governor Shaktikanta Das expressed optimism about the prospects for investment activity, citing several factors. These include the steady and broad-based upturn in private capital expenditure, robust government capital spending, healthy balance sheets of banks and corporations, and the rising capacity utilization levels.
Overall, the survey findings paint a picture of improved consumer confidence and economic optimism in India, driven by favorable growth prospects, moderating inflation expectations, and positive indicators in the manufacturing and investment sectors.
