 You're watching News Made Easy, I'm Anindya Chakravarty, there's a deep-seated pessimism that's hanging over India's economy and why is that important? Because to understand we have to find out what drives an economy and one of the key things that drives an economy is when consumers buy goods and services. What happens then when that is bought, when there's demand for such thing, investment takes place, right? Businesses invest in not just in consumer goods, which are things that you and I buy, but when you buy a consumer goods, it is being produced somewhere, right? There's a factory behind it and that factory needs land, it needs cement, it needs machines, it needs power, so those are capital goods. Capital goods are also a sector where businesses invest because you and I spend. So it goes all the way down to things which we don't think we are directly linked to and when that happens, when investment increases, what happens? Employment increases. People get jobs and when they get jobs of course they have money and they invest. This is what would be called a virtuous cycle of demand leading to more supply, supply causing employment, more jobs and again more demand and one way for us to understand this is consumer sentiment. What are consumers thinking? Do they want to spend more in the near future? Do they think they're going to earn more in the near future? If they don't think they're going to earn more, they're not going to spend. They're not going to spend especially on what we call non-essential goods or discretionary goods. They're not going to buy the fridges and the TVs and the air conditioners and the cars or even take EMI's for homes because they're not sure about where their next salary or pay is going to come from and that is a cure signal that we're seeing in India. The consumer sentiment in India is down right now and this is, I'm quoting from the latest piece by Mahesh Vyas of CMI and all the data that you see here is available in his article that's come out in Business Standard. Some of you would have read it probably and some of it would be available on the RBI site as well and I'm going to start with CMI's own estimate of consumer sentiment and here's a graph which tells you what has happened to consumer sentiment ever since the COVID lockdown began. It literally fell off a cliff so here you see from November 2019 to November 2021, two years, it fell off a cliff right after March and April and there it dropped but it hasn't really recovered so you're hearing that our GDP is recovering, it's almost back to where it was in 2019 but look at what is happening to consumer sentiment. It is 43% down from where it was in November 2019. Two years ago, if it was at 100, today it is at 57. That's what has happened to consumer sentiment. Of course the index itself is slightly different but let's also look at something as to what consumers think about the current economic situation. Again, this graph will tell you and the blue line like in the previous line is where it was in November and you can see how it has dropped. Even here there's been a massive drop and there's hardly been any recovery despite all the recovery talk that we're hearing. It is down 46%. That's what people think about the current economy, their sentiment about the current condition of the economy. What is their sentiment about? How the economy is going to pan out? What are the economic expectations? And here you see again a massive drop and the blue line is 2019 November and here again there's a 41% fall. The recovery is only marginal. There's a long way off to recovery and the reason why we see that people are scared of the future, unlikely to buy expensive things, invest in things that the corporate sector wants them to invest in is because their incomes are low and here is the RBI's data. How many earned more this year compared to last year? And you can see compared to November 2019 this year that number is down 51%. 51% that number is down right now. Usually what happens is that even if people don't get enough money they have a sense that next year I'm going to do better. In general if you look at RBI's data even if the number of people who did well in a particular year is low their expectation from the next year is higher. Even here we are saying what is the estimate as to how many people are going to earn more. Again here it is less than half the people who were surveyed and it is down 11% from November 2011. The interesting thing here is that in November 2019 and the interesting thing here is that in July 2020 actually that expectation went up. There was a hope that things are getting better within three months of the lockdown and since then the reality has turned out to be much worse and people have their expectation and their expectation of pay has dropped sharply and it hasn't recovered at all. So that's what we are saying that as long as this pessimism hangs over India's economy the recovery is not going to come that easily at least industrial recovery is going to take manufacturing recovery real estate recovery is going to take a much much longer time even if government continues to spend. That's the show today keep watching news click like us subscribe to us and do share this video.