RURAL SENTIMENTS SOAR BUT TOWNS ARE SORE
Consumer sentiments improved dramatically during the week ended May 28. The Index of Consumer Sentiments scaled up an impressive five per cent during the week. This is a sharp increase in the index during the course of one week.
It is likely that the prime minister’s extraordinary communication skills and the ad blitz by the government machinery on Modi Sarkar’s completion of three years in office has succeeded in raising consumer sentiments. BJP president Amit Shah is reported to have told the media in Delhi that the
achhe din are already here. “Ask the question about achhe din to the two crore women who now have LPG cylinders. It is achhe din for them; 4.5 crore households now have access to toilets, it is achhe din for them. People who have received loans through Mudra Yojana, it is achhe din for them.”
Not many would buy the proposition that achhe din are here already and many more could be dismayed by what is being described as the promised
achhe din. But, what matters is that a forceful communication works in converting people on the margins. It helps people who are willing to change their view if pushed, persuaded or even nudged a bit to do so.
It also helped that the prime minister, while inaugurating the 9.15 km long Dhola-Sadiya bridge during the last week, painted a powerful picture of the Northeast.
No one got those LPG cylinders, access to toilets or loans during the last week, and the future is a mere promise for now. But, a realisation was delivered last week. And thereby, a perception was created at least for those at the margins of belief.
The consumer sentiments indices show that the change in perceptions is essentially rural and not urban.
Rural folks have had reasons to be happier today. Loan waivers and a hike in support prices for sugarcane have helped and, most of the achievements listed by Shah have gone to the rural masses.
More importantly, early kharif sowings are up. Cash crops such as sugarcane and cotton have seen a 10 per cent increase in sowing as of May 26 this year compared to the corresponding period a year ago. The sharp increase in these sowings tells us something about the expectations in farmland India. There is optimism in the air.
Rural consumer sentiments shot up by 10 per cent in the week ended May 28. This is an extraordinary rise. Surprisingly, the May 26 announcement of stringent restrictions on cattle trade did not dampen rural consumer sentiments. Perhaps, the government understands the pulse of the people quite well. Or, it may be early to tell.
Urban India continues to suffer low consumer sentiments. Since January 2016, when we launched the BSE-CMIE-UMich consumer sentiments indices, urban consumer sentiments have been on average about four per cent lower than rural sentiments.
During the week ended May 28, the gap between rural and urban consumer sentiments widened. The urban consumer sentiments index was 13 per cent lower than the rural index.
Urban consumer sentiments are mucked by a severe shortage of jobs. Amit Shah’s communication did not help. His remark on the contrary could have spooked consumer sentiments. He has been quoted as saying: “We have tried to give new perspective to employment as it is not possible to provide employment to everyone in a country of 125 crore people. We are promoting selfemployment and the government has made eight crore people self-employed.”
First, a self-employed person is also an employed person. So, if the government is promoting self-employment it is also promoting employment. There is no contradiction here. Second, selfemployment is not happening. If eight crore new self-employed jobs were created then our unemployment problem would have been solved by now. Less than that were unemployed. Was this a third anniversary jumla?
Urban India faces a low and falling labour participation rate (LPR). Before demonetisation, the LPR was around 45 per cent. This fell steadily and showed up in a spuriously low unemployment rate. But now, in May, even unemployment has started to rise. This means that urban India now faces a low-andfalling labour participation rate and a low-but-rising unemployment rate. Urban unemployment was 5.3 per cent in the week ended May 28. It was 4.1 per cent in April.