Disappointment has increased about how good the economy of the country and the people is now and how well it can be in the next one year. According to the latest data from the Reserve Bank of India, the data for May telling about it has come down to a low record. This is happening when economic activity has decreased worldwide due to Covid-19 and economies are in shambles.
According to the Reserve Bank's Consumer Confidence Survey, the current situation index fell to a low record of 48.5 in May from 53.1 in March. This index being above 100 means that the common people are feeling better about themselves and the current economic condition of the country. The lower the figure is than 100, the more it indicates despair.
The participants in the RBI survey have expressed their fears that their economic condition and the country's economic condition will remain weak for up to one year. The Reserve Bank said that its futures expectation index also declined to 96.4 in May, from 108.8 in March. According to the RBI, 'The recent survey has also revealed a reduction in the expenditure of the households.'
The Reserve Bank has said on the basis of its survey that people are also disappointed about their economic condition and employment. The situation is so bad that people have started reducing even the necessary expenses. There is already a decline in the expenditure on those things, without which people can work.
This is bad news for a country's economy based primarily on consumption. The High Frequency Economic Indicator (issued more or less on a monthly basis) is indicating a moderation in all activities. Business activities have reduced in the retail sector and there are less traffic jams on the roads. The demand for electricity has decreased and the unemployment rate is rising.
According to the second Reserve Bank survey, most people are anticipating inflation to remain high for a long time. This is adding to its troubles on the monetary policy front, which had stalled interest rate cuts more than a year ago due to rising inflation. Moreover, it was unable to cut rates yesterday to boost growth.
Common people are expecting the inflation rate to be 10.2% in May. This is 150 basis points higher than their estimate in March. They are forecasting inflation to remain at 10.8% for the next three months from May. This is 70 basis points higher than the inflation forecast reported in March. He estimates that the inflation rate can be 10.9% in the next one year.
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