Pandemic severely impacted consumer confidence, but government measures may help

The pandemic severely dented consumer confidence in India, with sentiments of households across strata influenced by the spread of infections and fatalities. But sustained momentum in the ongoing reform measures by the Government may help in improving the employment and income situation amongst households, leading to a gradual recovery in consumer confidence.

An analysis of RBI's consumer confidence surveys done by RBI researchers reveals that the consumers’ perception about the prevailing situation is severely impacted by the pandemic, while the expectations about the future have been relatively optimistic, despite being dented in successive rounds.

The study by RBI economists showed that consumer confidence directly correlated with the number of cases and death. Consumer confidence waned as cases and fatalities rose, while improvements in the pandemic situation led to relative recovery.


The study showed that metro cities like Bengaluru, Mumbai and Delhi, where the cases were very high, recorded a substantial deterioration in the average CSI after the outbreak of COVID-19 pandemic as compared to the other cities.

The study found that ‘Retired/Pensioners’ were the least affected by the pandemic. Even the future expectation index deteriorated only by an average 11 per cent for various occupation categories. ‘Retired/Pensioners’ and ‘Self Employed/Business’ were less pessimistic about the year ahead as compared to the other occupation categories.

Amongst the survey indicators, household income was impacted the most by the pandemic induced restrictions, causing consumer confidence to hit multiple lows during this period. The effect of lower incomes is seen on consumers’ perception about general economic situation and employment as well.

These parameters seem to be the major drivers of lower discretionary spending by consumers. Overall spending has been shored up by essential spending, which is mostly influenced by prices.

With the proactive steps taken by the Government and other public authorities, along with the ongoing vaccination programme, expectations have recovered relatively faster than perceptions.