Indian consumers remain confident despite the country's economic difficulties and the uncertainties ahead of elections

WARC, 4 February 2014

NEW DELHI: Indian consumers are the second most confident in the world according to a new survey, despite the country's economic difficulties and the uncertainties ahead of elections.

The Nielsen Global Survey of Consumer Confidence and Spending Intentions for Q4 2013 found that confidence in India was actually rising, the index there rising to 115 from 112 in the previous quarter. Indonesia led the way globally with a score of 124.

The Economic Times reported the comments of Nielsen India President Piyush Mathur: "The last quarter of 2013 sees optimism for consumers influenced by relative economic stability and a reduction in negative news across economic parameters."

According to the survey, 62% of online respondents indicated that India was going through an economic recession, down 14 percentage points from the preceding quarter (76%).

But Mathur expected that continuing inflation and upcoming elections would have an adverse impact in the first quarter of 2014. "They [consumers] are likely to tighten their purse strings now that the festival and holiday periods are over," he said.

Three quarters of respondents had already altered their spending patterns in the fourth quarter in order to save on essentials, including saving on gas and electricity (54%), spending less on new clothes (49%) and cutting back on holidays (38%).

At the same time, however, Reuters noted that consumers were being "showered with goodies such as free water, cheaper electricity and subsidised cooking gas" as political parties positioned themselves ahead of a national election due in May. Some party leaders have even promised to scrap income tax.

Separately, Reuters reported that the incomes of Indian consumers were growing faster in small towns and rural areas than in the major cities, which was attracting the attention of global automakers anxious to see a return on their investment in vehicle production.

But analysts warned that to successfully trap into this "gold mine", foreign carmakers would need to focus on the provision of after-market facilities such as mobile repair and service workshops if they were to break the stranglehold of domestic brands.

Data sourced from Economic Times, Reuters; additional content by Warc staff

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