The RBI's July edition of the consumer confidence survey shows that urban Indians are still highly pessimistic about employment opportunities, though their confidence has marginally improved since May when the second COVID-19 wave was at its peak. However, in July, 65.9% of the respondents, the highest since the survey started, said income levels have dropped and 93.1% said commodity prices have increased. Thus, consumers believe that while the employment scenario has improved a little compared to the time when the second COVID-19 wave was at its peak, income levels are yet to recover, with prices continuing to soar. Data backs their perception. While both the Labour Force Participation Rate (LFPR) and employment rate (ER) have improved significantly after the second wave, the quality of jobs has been poor. Most of the job additions in July have come in the daily wage and farm labourers segment, while more salaried jobs have been lost. Retail inflation continues to increase, breaching the comfort zone for two months in a row.
Perception about economy
The graph shows the share of respondents who said that the general economic situation has worsened, employment opportunities have worsened, income levels have decreased, and price levels have increased in the latest edition of the RBI's consumer confidence survey between June 28 and July 9. People continue to be pessimistic about the economy and employment opportunities, though there is a marginal improvement in confidence from the levels seen in May during the second COVID-19 wave. However, pessimism is still growing when it comes to income and commodity price levels.
Perception about economy Chart 1- Aug 10
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Employment
The graph shows the LFPR and ER. Both LFPR and ER have improved after their fall during the second wave.
Employment rate Consumer Survey Aug 10
Quality of employment
The chart shows employed persons (in million) under various occupation groups. In July 2021, an impressive 16 million jobs were added in India. However, the quality of these jobs was poor. For instance, 18.6 million of the jobs added in July were in the small and daily wage labourers segment, while 3.2 million salaried jobs were lost in the same month.
High inflation
After touching a six-month high in May, India's retail inflation remained virtually unchanged in June at about 6.3%. It was still out of the central bank's comfort zone for the second month in a row.
Month-wise inflation rate- Consumer Survey Aug 10
Source: CMIE, RBI, MOSPI
Also read: Editorial | Tightrope walk: On reining in inflation and RBI’s credibility
