The BSE-CMIE-UMich consumer sentiments indices are based on responses to five questions. One of these five is a specific question on intentions to buy consumer durables. The question goes as follows: "Do you think that this is generally a good or bad time to buy things like furniture, refrigerator, television, two-wheeler, car? The respondent is requested to pick one of the three options - Good time, Same as other times, Bad time, that best reflect the view of the household.
Usually, between 25 and 30 per cent of the respondents say that it is a good time to buy such goods. During a short-lived period between mid November and end December 2016 this proportion had shot up over 30 per cent and peaked at 34 per cent.
Interestingly, while the proportion of respondents saying this is a good time has remained steady over time, the proportion of respondents saying that this is a bad time to buy has increased from 15-20 per cent to 20-25 per cent. This shift happened in December 2016.
It is the difference between the good-times and bad-times responses (net responses) that tell us something about the shifts in sentiments. It is evident from the above that on a net basis, households think that most times are good times to buy durables. On a net basis, 5-10 per cent of the households believe that it is a good time to buy durables.
In 2016, pitrupaksh had no negative impact on the net intentions to buy consumer durables. The pitrupaksh period in 2016 was from September 16 through October 1. Throughout this period, the per cent of people who said it was a good time to buy consumer durables on a net basis rose systematically and handsomely.
Only 3.7 per cent of the respondents on a net basis said that it was a good time to buy during the week just before the pitrupaksh period began in 2016. By the end of the period, this ratio had risen to 11.4 per cent. The ratio of people who believed that it was a good time to buy, increased from 23.4 per cent to 29.4; at the same time the ratio of people who believed that it was a bad time to buy decreased from 18.8 per cent to 16.8 per cent.
Perhaps, a good monsoon after two years played a bigger role in the minds of households than the tradition of pitrupaksh.
The week ended September 10 was the first week of the 2017 pitrupaksh period.
On a net basis, the per cent of households who believed that is good time to buy consumer durables rose 0.5 percentage points compared to the earlier week. This again, is contrary to what is expected of a pitrupaksh period in India.
More importantly, the proportion of net buyers has been falling more or less systematically since the beginning of August 2017. In the week ended July 30, 10.3 per cent of the households believed that this was a good time to buy. By the end of week ended September 3, this was down to a mere 0.3 per cent. The first week of pitrupaksh did not make this ratio worse. It raised it to 0.8 per cent.
It is noteworthy that the question addressed to households does not talk about the future. It talks about the present. Households overwhelmingly said that the pitrupaksh time was a good time to buy and not a bad time to buy. How do we square this with the rise in overt Hindutva.
Apparently, Indian households are more rational economic agents than their culture may make them look like. A good monsoon after a long break in 2016 warranted an exception to cultural traditions. An auspicious Ganesh Chathurthi, Onam, Janmashthami along with Bakra Id and Pateti -- all in August 2017 -- could not lift consumer sentiments during August in the face of a very poor jobs scenario. Rationality, apparently, is an integral part of the argumentative Indian as an economic agent.
We shall soon see what households tell us during the remaining period of pitrupaksh this year.
Every Tuesday, Business Standard brings you CMIE’s Consumer Sentiments Index and Unemployment Rate, the only weekly estimates of such data. The sample size is bigger than that surveyed by the National Sample Survey Organisation. To read earlier reports on the weekly numbers, click on the dates:
November 21, November 28, December 4, December 11, December 18, December 25, January 1, January 8, January 15 , January 22, January 29, February 4 , February 12, February 19, February 27, March 5, March 13, March 19, March 26, April 02, April 10, April 17, April 23, May 1, May 8, May 15, May 21, May 28, June 4, June 11, June 18, June 25, July 2, July 10, July 16, July 23, July 30, August 7, August 14, August 21, August 27, September 3
Consumer sentiment indices and unemployment rate are generated from CMIE's Consumer Pyramids survey machinery. The weekly estimates are based on a sample size of about 6,500 households and about 17,000 individuals who are more than 14 years of age. The sample changes every week but repeats after 16 weeks with a scheduled replenishment and enhancement every year. The overall sample size run over a wave of 16 weeks is 158,624 households. The sample design is of multi-stratrification to select primary sampling units and simple random selection of the ultimate sampling units, which are the households.
The Consumer Sentiment index is based on responses to five questions on the lines of the Surveys of Consumers conducted by University of Michigan in the US. The five questions seek a household's views on its well-being compared to a year earlier, its expectation of its well-being a year later, its view regarding the economic conditions in the coming one year, its view regarding the general trend of the economy over the next five years, and finally its view whether this is a good time to buy consumer durables.
The unemployment rate is computed on a current daily basis. A person is considered unemployed if she states that she is unemployed, is willing to work and is actively looking for a job. Labour force is the sum of all unemployed and employed persons above the age of 14 years. The unemployment rate is the ratio of the unemployed to the total labour force.
All estimations are made using Thomas Lumley's R package, survey. For full details on methodology, please visit CMIE India Unemployment data and CMIE India Consumer Sentiment.
The creation of these indices and their public dissemination is supported by BSE. University of Michigan is a partner in the creation of the consumer sentiment indices.