Demonetisation hits consumer buying sentiment, TRA Research says
With consumers facing a severe cash crunch due to demonetisation led to lower consumer spends.
The recent demonetisation drive by the government has hit India's consumer spending severely. India’s Buying Propensity Index (BPI) in December 2016 stood at 0.26, (measured on a scale between +1 to -1), down 0.42 BPI points from November (0.68), according to report by TRA Research.
Source: TRA Research
The period of November and December has been characterised by just a single event -- the demonetisation of high-powered currency notes. While the BPI of consumers had been growing from 0.43 BPI points in July to 0.68 BPI points in November, it saw a drastic drop in December.
N Chandramouli, CEO, TRA Research, elaborating on the BPI said, “The country’s buying sentiment was consistently recovering since July 2016, but Narendra Modi’s surprise demonetisation announcement was the biggest factor causing unnatural fluctuations in the buying sentiment of the country as reflected by the Index. The November 2016 BPI had shown a rise of 19% stemming from the initial euphoria of long term positive connotations of the announcement.”
Source: TRA Research
Chandramouli further added that the December fall was when the pain of demonetisation began to be felt more severely after the first salary cycle post-demonetization announcement in December, and the impact of the enduring business and personal hardships was felt by citizens. The buying sentiment in December seems to have fallen precipitously to the lowest in 9 months.
Source: TRA Research
The Buying Propensity Index is a result of a primary research across 3,000 consumer-influencers across the 8 Tier –I cities in India conducted every quarter.
Considering the 8 cities studies for the BPI, Delhi was most severely impacted with a month-on-month fall of 122% in citizens’ keenness-to-buy, registering a negative sentiment in December at -0.14. This was followed by Kolkata with a BPI fall of 90%.
Source: TRA Research
The three cities which showed a medium fall in BPI were Mumbai (-58%), Pune (-46%) and Chennai (-35%). The cities which had a lower negative impact of demonetization on BPI were Bangalore (-16%) and Hyderabad (-15%). Ahmedabad was totally contrary to the BPI of the other cities, falling from a high 0.63 in October to 0.46 in November.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Retirement Planning: SIP+SWP combination; Rs 15,000 monthly SIP for 25 years and then Rs 1,52,000 monthly income for 30 years
EPF vs SIP vs PPF Calculator: Rs 12,000 monthly investment for 30 years; which can create highest retirement corpus
Retirement Calculator: 40 years of age, Rs 50,000 monthly expenses; what should be retirement corpus and monthly investment
SBI 444-day FD vs Union Bank of India 333-day FD: Know maturity amount on Rs 4 lakh and Rs 8 lakh investments for general and senior citizens
Home loan EMI vs Mutual Fund SIP Calculator: Rs 70 lakh home loan EMI for 20 years or SIP equal to EMI for 10 years; which can be easier route to buy home; know maths
07:46 PM IST