How are India's consumers faring?

It is almost two years since the NDA government came into power, with promises of better times. It was a timely promise for an electorate exhausted by a government rendered weak by its own challenges and a less than promising global environment.

Two years later, there are reasons for satisfaction and there are reasons for discontent.

But what does the scenario like from an overall perspective of the common Indian like you and me?

We at Orbis Economics have developed a composite measure of Consumer Conditions, which informs us how Indians are faring in their role as consumers. The measure is based on monthly proxy indicators for consumption, intent to purchase and also the price conditions. The measure stands at a value of 103.1 for March, 2016, the period for which we have the latest numbers.

So is this good or bad?

Any value above 100 indicates that consumers are better off than they were during the past 12 months and a value below 100 indicates that they are worse off than they have been over the past one year.

The good news is, that at a value of 103.1, consumers are better off than they have been over the past 12 months. Moreover, the value has been consistently over 100 for the past four months. Reaching the above 100 mark is not necessarily a given: In 6 of the past 12 months, the value was actually below 100, indicating that consumers are worse off in these months than they have been in the past one year.

So far so good.

However, the measure is slightly down from the corresponding period of the previous year. In March 2015, it stood at 106.9 and even in March 2014 the value was at 104.1. In sum, therefore, the Consumer Conditions measure indicates, that while at the end of 2015-16, the average Indian consumer saw improving conditions, compared to the rest of the year, the conditions themselves are not as good as they were at the same time in 2015 or in 2014.

What explains this trend?

The period prior to March 2014 was particularly weak in terms of consumer conditions, which provided much buoyancy to the measure value. However, there was a genuine improvement in conditions by March 2015, in the first year of the NDA government on account of economic optimism, among other factors. However, continued challenges to the Indian economy, have cast a shadow on the latest reading.

Despite improved price conditions and intent among consumers to buy, there is still some on the ground diffidence among consumers.