The drop coincides with a deepening slowdown in Asia’s third-largest economy and increased worries about employment. The yearlong crisis in the shadow-banking sector has tightened lending, affecting domestic consumption that makes up about 60 per cent of the nation’s economy. All this contributed to growth cooling to a new six-year low in the quarter ended September.
The central bank’s survey was conducted in 13 big cities and 5,334 households. Consumers were surveyed about perceptions and expectations on the general economic situation, the jobs scenario, the overall price situation apart from income and spending.
Worryingly enough, respondents felt that prices have increased in the past year and are likely to rise in the year ahead, implying inflationary pressures are likely to stay sticky in the near term.
On Thursday, India’s central bank shrugged off lower growth worries to keep interest rates unchanged amid a spike in headline inflation. The six-member Monetary Policy Committee headed by Governor Shaktikanta Das decided to wait and see how the five rate cuts already delivered this year pan out before it does more.