Indian consumers validate their faith in their new government

Improved confidence signals end to disappointment over economic state voiced over past two years

ZyFin Economic Conditions Index has been on a steady uptrend, reflecting improving mood of consumers. The monthly index has been on an uptrend since January 2014, reaching its highest score of 67.2 in November 2014. The Index is a barometer of Indian consumers' perceptions on the economic conditions of the country. The uptrend coincides with the period when a change in government was apparent. This suggests a growing belief among consumers that economic conditions will improve in the near future, which should have a huge impact on India's consumer-driven economy.

ZyFin Research's Economic Conditions Index is the only tracker of Indian consumers' perception toward current and expected economic conditions. It is based on a monthly survey of 3,000 consumers in 11 Indian cities, representing urban consumers.

The index had been on a steady downtrend since its inception in October 2011, before bottoming out in December 2013, with Indian consumers expressing their disappointment with the prolonged slowdown over two consecutive years. Indian spenders now, however, see a ray of hope in the new government and this shift in opinion may go a long way in determining India's aggregate demand, driven by heightened consumption. This will be an effective solution to grow our sagging GDP; although, much depends on the government's continued ability to manage these expectations, which is necessary for Indian consumers to feel confident enough to loosen their purse strings.

The recovery in Economic Conditions is a widespread phenomenon, with consumers in all four regions of the country, North, South, East and West voicing similar opinions. Interestingly, consumers in South India were first to react, with the Index for this part of the country starting to pick up as early as June 2013. The remaining regions joined in the beginning of this year.

Giving his views on the continuous improvement in perceived economic conditions among Indian consumers, Mr. Debopam Chaudhuri, Chief Economist, ZyFin Research, said, It is encouraging to note that consumers have faith in the Indian economic recovery. With rising confidence towards better employment and income conditions, consumer spending should bounce back, leading to a sustained demand-pulled expansion in economic activity.

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