“April 2021 had seen an increase in unemployment and a fall in consumer sentiments. May seems to be headed in the same direction. The unemployment rate in May is expected to be in double-digits,” CMIE said in its weekly analysis. The average unemployment rate in 2020-21 was 8.8%.
CMIE data shows that the consumer sentiment index dipped further by 1.5% for the fifth consecutive week with the cumulative index down by 9.1% since the last week of March. In April 2021, the index of consumer sentiment was nearly 49% lower than it was in 2019-20. In April 2020, it was nearly 57% lower than the 2019-20 average.
As per CMIE, the main reason for the fall is dip in household income and increased pessimism regarding their future. Data shows over half the households or 55.5% reported a loss of income compared to a year ago while the remaining 41.5% stated that there was no change in their income compared to a year ago and just 3.1% of the households reported higher incomes than they a year ago.
“It is safe to assume that well over 97% of Indian households have suffered a fall in real income,” it said.
As per CMIE, the supply side of the economy had started recovering by September as restrictions on movements were lifted or eased. “But the economy did not offer the same jobs as earlier and not the same household incomes either,” it said, adding that by December 2020 household incomes were 6.7% lower than the average incomes during 2019-20 and that Indian households are getting poorer.
“While the supply-side has sprung back at least in the large organised sectors, the demand side continues to remain broken. Consequently, demand constraints will pose a challenge to the recovery process,” it added.