- The rural consumer sentiment index rose for the fourth consecutive month
- Inflation and unemployment rates are high in cities
With the onset of Navratri, various markets have seen a new boom after a year and a half. With the current epidemic crisis in the country now under control, the government, which has given maximum relief in the process of unlocking, is trying to re-establish the faltering markets. The reactions that have arisen on the income front have also been mild as economic and industrial activities have increased since the epidemic. Considering the recently available data, this time the festive season will see more ronak in the rural markets than in the cities.
Recently there has been a significant improvement in the purchasing power of consumers. The Consumer Sentiment Index was at 6.5 in the last week of September, up from 7.3 in August and 9 in July. Both rural and urban areas have improved in September.
If we talk about urban India, it lags behind the rural areas in terms of consumers. For instance, on September 6, the Consumer Sentiment Index for rural India was 71.7 while the Consumer Sentiment Index for urban India was 31.8 per cent with a big difference of 30.8 per cent.
Urban India faces significant challenges in sustaining the trend of improving consumer sentiment. Inflation in urban India is 7.5 per cent as compared to 7.5 per cent in rural India and it is also higher than rural India (6.5 per cent) with an unemployment rate of 7.5 per cent. Perhaps the employment gap between the two sectors is more consistent. While urban India lost about 3 million jobs in March, rural India added 1.5 per cent more jobs compared to March 2020. While rural India has managed to employ a few more people during the difficult times of the epidemic, urban India has failed to do so. As a result, while the income of urban households has declined, the income of rural households has improved.
In April 2021, the average household income in rural India was 2.4 per cent higher than the average monthly income in the year 2015-20, the year before the epidemic. But in urban India, the average family income in urban India was 12.5% lower than in 2015-16. The continuous loss of jobs in urban areas and declining incomes are also reflected in the poor perception of urban India. On the other hand, kharif crop is expected to do well despite erratic monsoon and delayed sowing.
The urban index of consumer sentiment rose 2.4 per cent in September, higher than the 4.1 per cent growth in rural areas. But even this growth is not enough to bridge the gap in consumer sentiment indicators between rural and urban areas. Consumer sentiment and household income data indicate that purchasing power is likely to increase in rural India this year.
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