Northern India leads in consumer sentiment as second Covid wave ebbs: Survey

Eastern India lags the nation while the north has led in terms of consumer spending reviving as the second wave of the pandemic ebbed, found a survey on consumer sentiment conducted by Axis My India, a Mumbai-based data intelligence company.

A sample of 10,865 adults across 21 states and 555 districts were taken for the survey.

Region wise

The agency said 50% of the respondents based in north India reported an increase in the spend of essential items. The figure was 30% for respondents form the east. About 48% from the southern regions and 42% from the west said they increased expenditure on essential items.

While 42% of the urban respondents reported an increase in expenditure, the share was 45% in the case of those from the rural areas. As much as 81% felt that a bountiful monsoon would drive a good kharif season.

Rise in economic activity

This coincided with the gradual easing of restrictions across the states and revival of economic activities.

Incidentally both Nomura India Business Resumption Index and the Daily Activity and Recovery Tracker Index have found that economic activity has returned to the pre-second wave levels in February 2021.

27% reduced expenditure

The Axis My India survey found that as much as 27% of the respondents said they reduced expenditure. The survey also detected pronounced negative sentiment for purchasing cars and luxury items.

“Overall household expenditure has risen for 54% of the families,” the report stated.

“Expenditure on essentials like personal care and household care products is up for 43% of families, while it has decreased for 27% families,” added the report.

With the overhang of financial insecurity, expenditure on non-essential and discretionary items increased for 15% families with 58% saying it is the same. It decreased for 27% of the families. Respondents from the north demonstrated a improved sentiment on non-essentials with an increase for 22% families.

Health considerations

However, health continues to be an important consideration. “Consumption on health-related items has increased or remained same for 78% of families and decreased only for 22% families,” said the survey.

The consumption of media has increased for 28% families, decreased for 25% while it remained the same for 47% found the survey. The rise in media consumption was the highest in the 18–25-year age group.

Hybrid working model

The survey also reported that 80% respondents wanted schools to reopen and a majority preferred a hybrid model of work.

Revival of consumer sentiment is a crucial indicator that invites constant attention by almost all the companies in the country. Revival of demand on which revival of the economy hinges critically is dependent on the revival in consumer sentiment.

RBI on second wave

The second wave had battered consumer confidence with Reserve Bank reporting in the first week of June that the “current situation index” dropped to a record low of 48.5 in May from 53.1 in March as the pandemic took the country in its grip. In the RBI survey 100 is the level that marks optimism from pessimism.

The “future expectation index” said RBI also dropped from 108.8 in March to 96.4 in May. The central bank also reported a reduction in household spending in view of the extreme financial uncertainties.

“The India Consumer Sentiment Index is our endeavour to capture the shifts as we navigate a radically altered post-pandemic world. We have selected relevant categories like inflation in household spends and expenditure on healthcare to account for everyday challenges affecting a significant percentage of the population,” said Pradeep Gupta chairman and managing director, Axis My India.