Consumers in India (file)Consumer sentiment eased for the third consecutive month in November as respondents sharply revised down their short-term outlook for business conditions while concrete reforms remain awaited.

The MNI India Consumer Indicator fell by 2.8 points to 120.9 in November from 123.7 in October, the lowest in 13 months. Consumer sentiment picked up in the run up to the general election earlier in the year, but has failed to maintain the momentum. The recent weakness in the survey shows that the Modi government’s policies have yet to have any concrete impact on Indian households’ overall confidence.

MNI is a leading provider of news and intelligence. It publishes monthly reports exploring attitudes, perspectives and confidence across different countries and regions. MNI is a wholly owned subsidiary of Deutsche Börse Group, one of the largest worldwide exchange organizations.

Asked specifically about the impact of government policy on their standard of living, 38% of respondents thought it had been unaffected as the government had not yet implemented any major policies. Just under 30% of respondents reported that they had benefited from the new government’s policies.

Many respondents praised Modi’s vision for India and were supportive of welfare schemes like Jan Dhan Yojna. Additionally, a significant portion of respondents were pleased that food and fuel inflation was falling. “Inflation expectations fell to a new record low in November. This will help the RBI to ease monetary policy in the first half of 2015”, noted the report.Prime Minister Narendra Modi releasing the brochure at the inauguration of the “Make In India” in New Delhi (file)

The decline in consumer sentiment was led by a sharp fall in expectations of Business Conditions in a Year’s time, while consumers were also less confident about spending on big ticket items following the conclusion of the festival season. This was in spite of consumers being more satisfied with the current level of prices, with a greater proportion expecting prices to fall in the next 12 months.

Moreover, consumers were increasingly pessimistic about buying a car. A growing proportion of respondents attributed their disinclination to buy a car to high interest rates in spite of lower expectations for gas prices.
Commenting on the latest survey, Chief Economist of MNI Indicators Philip Uglow said, “The Modi government has been in office for six months, but there has so far been little lasting positive impact on consumer sentiment. Policy action may eventually feed through, although for now the outlook remains reasonably subdued.”