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Consumer sentiment worsened in the week after Budget: CMIE

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The Index of Consumer Sentiments fell by 4.2% in the week after Budget reflecting worsening of household sentiments with more households feeling the economic situation would worsen both in the near future as well as over next five year, the Centre for Monitoring Indian Economy said.

“A full week after the presentation of the Union Budget, the Index of Consumer Sentiments fell 4.2% in contrast to a 9% increase in equity market valuations response to the budget on the bourses,” CMIE said in its weekly analysis. “Households were not very impressed with the budget. On the contrary, they have expressed their displeasure with it,”it said. The findings are based on the Consumer Pyramids Household Survey by CMIE.

According to CMIE, the Index of Consumer Sentiments fell under both the components, the Index of Current Economic Conditions, which fell by 3.5% and the Index of Consumer Expectations, which fell by 4.6%.

As per CMIE survey, 45.8% respondents said after the budget that they expected their incomes to worsen in a year compared to 42.3% who expected this a week before the Budget while 6.7% said that they expected their income to improve over the period of a year The remaining 47.5% expected their incomes to remain unchanged over the next one year.

Further, the proportion of households that believe that the financial and business conditions would improve in the coming year declined from a very low 5.5% in the week before the budget to 4.8% after the budget.

Those who believed that conditions would worsen increased from 44.9% before the budget to 46.5% after the budget while those who believed that there would be no change dropped a tad from 49.7% to 48.7%.

Even long-term expectations over a five year period are equally bad, if not worse, CMIE said. Its findings show that 7.1% of households believed before the budget that the economy would improve over a five year period but after the budget only 5.3% of the households believed so.

However, the proportion of households who believe that the economy would worsen over a period of five years has increased from 33.9% before the budget to 35.5% after the budget, it added.

“The budget may or may not be the reason for household perceptions to worsen in a week since the presentation of the budget. But, sentiments have worsened after the budget,” CMIE concluded.



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