NEW DELHI, June 28: Weakness in rupee, high inflation and slowdown in growth led to decline in economic confidence in the country in May compared to the earlier month, according to research firm Ipsos.
According to the Ipsos Economic Pulse of the World Survey, economic confidence among Indians declined by two points to 70 per cent in the month of May as compared to the previous month. It had stood at 72 in April.
However, India continued to retain the second most economically confident nation title after Saudi Arabia, which tops the table with a wide margin at 88 per cent in May.
“The symptoms of Indian economy being in poor health are building fast with growth rate slipping to a nine-year low of 6.5 per cent in 2011-12, current account deficit touching a high of 4 per cent and inflation at a high of 7.55 per cent in May.
“Rupee has plunged sharply in recent weeks especially on account of foreign fund outflows and gloomy investor sentiments. It has lost over 20 per cent against the US dollar over the past few months,” Ipsos India MD Mick Gordon said.
“The chronic gaps in infrastructure, a shortage of skilled labour, unproductive farming, government expenditure on inefficient subsidies, barriers to overseas companies looking to invest and a proposal for punitive retrospective taxation on foreign companies has added to the already slowing growth,” he added.
However, Gordon is hopeful that Prime Minister Manmohan Singh who has taken charge of the finance portfolio will take measures to revive the economy.
“Now hopes of revival are pinned at Manmohan Singh, Prime Minister of India who is looking after the finance portfolio. He is expected to bring in changes to revive the stalled economic growth, arrest the rupee’s fall and deal with the fallout of a possible breakup of the euro zone, a tough task,” Gordon said..
The survey said that half of Indian citizens believe their local economy which impacts their personal finance is good and 54 per cent people expect the economy in their local area would be stronger in next six months.
The study, which examined citizens’ assessment of the current state of their country’s economy, said the overall global average economic confidence was down by one point to 37 per cent in May—the lowest since the economic downturn of 2009.
Individually, citizen confidence in Saudi Arabia stood at 88 per cent followed by India (70 per cent), Germany (69 per cent), Sweden (64 per cent) and China (63 per cent).
The survey was conducted in April 2012 among nearly 19,000 people in 24 countries including India, the US, Australia, the UK, China and Brazil. (PTI)
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