Mumbai: The buying propensity index (BPI) that measures urban Indian’s buying sentiments or keenness to buy dropped sharply in December to its lowest level in last nine months as cash crunch on account of the ban on high denomination notes impacted sentiments. The index, which is measured on a scale between +1 and –1 slumped to 0.42 in December from 0.68 reported in November.
“In November, BPI had shown a rise of 19 per cent, which was mainly due to the initial euphoria about the long term positive connotations of the announcement. However, the sentiment deteriorated badly in December as the pain of demonetisation began to be felt more severely by both businesses and citizens had to endure hardships. This was more visible during the first salary cycle post demonetisation,” said N Chandramouli CEO, TRA Research.
According to him, it would take at least another one or two-quarters to witness any meaningful recovery in consumers buying sentiment. “Otherwise the government will have to make any major announcement to lift sentiments, which is not coming at the moment,” he added.
Among the top eight cities, Delhi was the most impacted with its citizen's keenness to buy registering a negative BPI reading –0.14 in December, a month on month fall of 122 per cent followed closely by Kolkata with a BPI fall of 90 per cent from 0.94 in November to 0.10 in December.
The three cities that showed a medium fall in BPI were Mumbai (58 per cent), Pune (46 per cent) and Chennai (-35 per cent). The cities, which witnessed the lowest negative impact of demonetisation on consumer buying sentiment in December, were Bengaluru and Hyderabad. The BPI in both these cities dropped just 16 per cent and 15 per cent respectively.
