According to CMIE, the average monthly growth in consumer sentiments during April 2022 through March 2023 was 2.68% but the month-to-month change was volatile, ranging from -1.7% in November to 7.1% in September.
“The expected growth in April 2023 would be in the vicinity of the average monthly growth seen in 2022-23,” it said in its weekly labour market analyses, adding that the consumer sentiments are growing at a rather slow pace.
CMIE foresees the ICS to revert to pre-Covid levels by September-October 2023, just in time for the festive season in India, if it continues to grow at the 2.68% per month which is the average growth in ICS in the past twelve months.
However, the El Nino playing truant with monsoons this year and the continued sluggishness of private investments in India could pose challenges to consumer sentiments to reach the pre-pandemic levels, it said.
“The 2023 calendar is full of state elections and that may lead to some excess cash transfers to the electorate which could possibly help lift consumption. But, this is unlikely to help lift consumer sentiments,” it added.
CMIE is of the view that the one-off cash transfers can be expected to increase consumption of some kinds of foods and liquor but sentiments do not improve if the households do not see an increase in income or perceive an increase in future income or the propensity to consume consumer durables.“Elections therefore could help lift sentiments only marginally and this is unlikely to offset the effects of El Nino if the effects are as severe as they threaten to be,” it said.
CMIE feels that a strong turnaround in consumer sentiments such as of the kind seen in January and February 2023 is important for the Indian economy to post a stronger growth and propping up income through distress-time or election-time transfers cannot improve sentiments.
“Perhaps, the only means of correcting consumer sentiments strongly is to spur employment-generating investments,” it said, adding so far there are no signs of this picking up.