Consumer Confidence Index 2020 | UPSC
HEADLINES:
RBI: Consumer confidence Index 2020 ; at all-time low in Sept, set to improve in next 12 months
WHY IN NEWS:
The consumer confidence index declined to 49.9 in September, as against 53.8 in July.
SYLLABUS COVERED: GS 3: Reports
LEARNING:
For PRELIMS there are few important definitions and a formula used in this report . They are quite important .
For MAINS analyse this report with previous data , Predict the future CCI index . Note down the key comparisons found in your Mains book .
ISSUE:
CONSUMER CONFIDENCE INDEX 2020
- The Consumer Confidence Index (CCI) is based on the premise that if consumers are optimistic, they will spend more.
- This will stimulate the economy but if they are pessimistic then their spending patterns could lead to a recession.
TITLE
Consumer confidence Index 2020
PUBLISHED BY
Reserve bank of India
TIMELINE
- The survey was conducted during August 29 –September 10, 2020 in 13 major cities.
- Perceptions and expectations on general economic situation are used in this report .
- Also , employment scenario, overall price situation and own income and spending were obtained from 5,364 households.
REPORT ANALYSIS
KEY POINTS
- Consumer confidence remained at an all-time low level in September.
- The general economic situation had been worsening during the month.
- However, the situation is set to improve in the next 12 months, the survey said.
- The index has improved from 105.4 to 115.9 on a one-year ahead expectations basis.
- This is indicating a recovery in the consumer confidence level over the next 12 months.
- On the inflation RBI survey said households’ median inflation expectations remained elevated.
CREDITS : RBI
CALCULATION
- The current situation index (CSI) recorded its third successive all-time low.
- As the respondents perceived further worsening in general economic situation and employment scenario during the last one year.
- Households were, however, more confident for the year ahead.
FUTURE EXPECTATIONS INDEX (FEI)
- The CCI reflects consumers’ short-term—that is, six-month—outlook for, and sentiment about, the performance of the overall economy as it effects them.
- It deals with six-month outlooks for business, employment, and income.
CURRENT SITUATION INDEX
- The Present or Current Situation Index is an indicator of consumer sentiment about current business and job market conditions.
- Businesses, investors, and economic policymakers watch the Present Situation Index along with related indicators.
- This will help gauge near-term consumer demand.
GROSS DOMESTIC PRODUCT (GDP)
- Overall financial situation was assessed to have improved.
- Respondents maintained negative sentiments on selling prices and profit margins in Q2 of 2020-21, though pessimism moderated.
- It is expected to recover next year, when it is expected to grow by 8.2 per cent.
- Real private final consumption expenditure (PFCE) is assessed to contract by 11.0 per cent during 2020-21.
- Real gross fixed capital formation (GFCF) is projected to record a large decline of 21.0 per cent in 2020-21.
SURVEY AND RESPONSES
- As per CSS, 74.4 per cent of the respondents felt that the current perception on the general economic has worsened.
- 11.2 per cent (19.3 per cent) said it has remained same
- 14.4 per cent (28.4 per cent) said it has improved.
EMPLOYMENT
- 67.4 per cent (55.7 per cent) of the respondents felt that the current perception on employment has worsened.
- 13.4 per cent (19.1 per cent) said it has remained same.
- 19.2 per cent (25.2 per cent) said it has improved.
INCOME
- 53.4 per cent (24.9 per cent) of the respondents felt that the current perception on income has decreased.
- 34 per cent (52.4 per cent) said it has remained same
- 12.6 per cent (22.7 per cent) said it has increased.
SPENDING
- 56.1 per cent (72.6 per cent) of the respondents felt that the current perception on spending has increased
- 31 per cent (24 per cent) said it has remained same
- 12.9 per cent (3.4 per cent) said it has decreased.
PRICE LEVEL
- 79.1 per cent (87.2 per cent) of the respondents opined that the current perception on price level has increased
- 17.5 per cent (10.3 per cent) said it has remained same
- 3.4 per cent (2.6 per cent) said it has decreased.
CREDITS : RBI
IASbhai WINDUP:
- More respondents reported curtailment in both overall and essential spending during the past one year, when compared with the last survey round.
- Consumers expect improvements in general economic situation, employment conditions and income scenario during the coming year.
- Discretionary spending, however, is expected to remain low in the near future.
STEEP DECLINE
- Consumer confidence collapsed in May 2020, with the current situation index (CSI) touching a historic low .
- COVID-19 pandemic and the resulting lockdown and slowdown has cast a long shadow on the economy.
SOURCES:THE HINDU & PIB | Consumer Confidence Index 2020 | UPSC

DISCOVER MORE : REPORTS
If you liked this article, then please subscribe to our YouTube Channel for Daily Current Affairs , Editorial Analysis & Answer writing video tutorials. You can also find us on Twitter and Facebook.