e Index slipped to 91.1 in November 2017, the lowest level in the last four years. The last time consumer confidence was lower was in September 2013, during the depths of the taper tantrum. A reading of above 100 denotes optimism, while one below 100 indicates pessimism. The RBI survey is conducted in the six metropolitan cities of Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi. Chart 1 has the details. It shows that consumer confidence has been falling steadily since May 2017.

The results of the survey fit in with the gross domestic product data for the September quarter, which showed private consumption growth was the lowest in the last eight quarters.

One of the main reasons for consumer confidence to be so low is the perception on employment prospects. The net response, which is the percentage of people who say employment prospects have improved minus the percentage who say prospects have worsened, is now lower than even during the depths of the taper tantrum, in September 2013. Chart 2 has the details. Note that the net response has been negative since December 2016, which means that those who think employment prospects are worsening outnumber those who believe they are improving. What’s more, the negative net responses have been increasing. Clearly, demonetisation and the goods and services tax have had an adverse impact on employment.

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