COVID-19 dented consumer confidence; average household income fell over 50% in March-July 2020, says RBI bulletin

The COVID-19 pandemic severely dented the consumer confidence in India, the latest bulletin from the Reserve Bank of India (RBI) stated. The bulletin was released on Monday, January 17, 2022.

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"Consumers’ perception of the prevailing economic situation and their expectations for the future also influence their spending, saving and investment behaviour. During economic expansion," the RBI bulletin said.

The COVID-19 pandemic struck India for the first time in 2020 when the nation went into a complete lockdown. Then, as the number of cases declined, the country was reopened in a phased manner. However, the state governments again imposed certain restrictions in 2021 due to the second wave of the pandemic.
At present also, there are certain restrictions that are in place due to the rising number of COVID-19 cases in the country. Furthermore, cases of Omicron variant of COVID-19 are also being recorded in the country.

The bulletin stated, "Sentiments of households across strata were influenced by the spread of infections and fatalities."

"There was enduring impact on consumers’ sentiments on their own financial conditions as well as the general economic situation – with the latter increasingly driven by the former," it added.

The RBI bulletin further stated that with the outbreak of the pandemic, the income situation of the households took a massive
hit. Furthermore, an overwhelming majority of the consumers reporting decreased incomes as compared to a year ago.

"As a result, the net response for current period household income fell by more than 50 per period household income fell by more than 50 per cent during March to July 2020, a period during which most of the economy was shut and the GDP saw a massive contraction," the bulletin said.

One must note that the pandemic has been very brutal in India, especially during the second wave in April-May 2021, when the daily new cases shot up to 4,00,000 per day.