NEW DELHI – Indian economy faces a setback revealed Reserve Bank of IndiaI’m its latest report.
The Reserve Bank of India (RBI) has signalled that public and industrysentiments remain unenthusiastic. A survey to gauge consumer confidencerevealed low optimism regarding the general economic situation andemployment scenario.
RBI conducted the Survey for the month of Septemberlinkin13 major cities including the national capital New Delhi and the financialcapital Mumbai with a sample size of 5,192 households. Almost half of therespondents (47.9 per cent) said, the general economic situation hasworsened, while every third respondent (52.5 per cent) felt the current jobsituation has worsened.
“Reserve Bank’s consumer confidence survey shows weak consumer sentimentand tepid consumption demand, especially relating to non-essential items.Manufacturing firms see weakening of demand conditions in Q2:2019-20 and Q3and expect their output prices to soften, going forward, as the cost offinance and salary outgoes remain muted,” said a statement by the MonetaryPolicy Committee (MPC) headed by the Governor of the RBI.
While 53.2 per cent hope the economy would improve in the year ahead, 51.2per cent feel the employment situation will get better in the coming months.
The respondents’ perception of the overall economic situation alsoinfluences their spending, with 26 per cent saying it would go down while39.2 per cent said, it would remain the same.
On Friday, the RBI had announced its key lending rates at 5.15 per cent,the lowest in nine years and lowered Gross Domestic Product (GDP) growthestimates to 6.1 per cent for the Financial Year 2019-2020 lower than theprojected 6.9 per cent, due to prevailing weak demand.
“While the recent measures announced by the government are likely to helpstrengthen private consumption and spur private investment activity, thecontinuing slowdown warrants intensified efforts to restore the growthmomentum. With inflation expected to remain below target, in the remainingperiod of 2019-20 and Q1:2020-21, there is policy space to address thesegrowth concerns by reinvigorating domestic demand within the flexibleinflation targeting mandate”, the MPC said putting the onus for improvingthe economy, equally on the government.
The Central Bank hopes, better monsoon rains would improve output in theagriculture sectorlink,whichcould help improve the economy.