“A STUDY ON CONSUMER CONFIDENCE INDEX FOR THE RESIDENTS OF CITY LUDHIANA”

MAJOR RESEARCH PROJECT
Submitted to

PUNJAB TECHNICAL UNIVERSITY
In partial fulfillment of Requirement for degree of
MASTER OF BUSINESS ADMINISTRATION
BY
SARGAM NAGRATH
(University Roll no- 1335890)

DEPARTMENT OF MANAGEMENT
PUNJAB COLLEGE OF TECHNICAL EDUCATION
BADDOWAL, LUDHIANA

AFFILIATED TO:
Punjab Technical University, Jalandhar
2013-2015

CERTIFICATE
This is to certify the thesis/dissertation entitled ‘Consumer Confidence Index For The Residents Of City Ludhiana’ submitted for the degree of M.B.A in the subject of Finance of the Punjab Technical University is a bonafide research work carried out by Sargam Nagrath (MBA HR & Finance), University Roll no( 1335890) and no part of this thesis/dissertation have been submit by any other degree.
The assistance and help received during the course of investigation have been fully acknowledged.

Major Advisor: Mrs. Pallavi Dawra HOD (Business Management) PCTE Group of Institutes

ACKNOWLEDGEMENT
Surpassing milestones towards the mission sometimes give me such degree of jubilance that I tend to forget the precious help extended by people to whom the success of mission is solely dedicated.

Like everyone else, I owe much more than I can repay or even tell in this venture. This report has been made possible through the direct and indirect cooperation and guidance of various people whom I wish to express my sincere appreciation & gratitude.
First with the limitless humility, I would like to thank “God”, for bestowing me with all the favorable circumstances and keeping me in high spirits.
I am extremely grateful to my parents for their invaluable support, blessings and encouragement. With the deep sense of gratitude, I express my sincere thanks to Mrs. Pallavi Dawra, the head of Department of our Institute for her guidance and whenever needed, support and direction that lead to completion of the project.

SARGAM NAGRATH (MBA- HR & Finance) 1335890

PROJECT DETAILS

Title of the Project : Consumer Confidence Index For The Residents Of City Ludhiana
Name of the Student : Sargam Nagrath
University Roll no : 1335890
Subject : Finance
Name of the Advisor : Mrs. Pallavi Dawra
Total Pages :
Name of the University : Punjab Technical University

ABSTRACT

A study was undertaken to measure the consumer confidence level of residents of Ludhiana. The study mainly includes the present and future expectations of consumer’s measured against different parameters that could influence. The data collected was all primary, as collected through personal interview in the form of questionnaire.

Sign of Major Advisor Sign of Student

TABLE OF CONTENTS

Sr. No. | Particulars | Page No. | 1 | Introduction | | 2 | Review of Literature | | 3 | Objectives of Study | | 4 | Research Methodology | | 5 | Data Analysis & Interpretation | | 6 | Findings and Conclusion | | 7 | Recommendations | | 8 | Bibliography | | 9 | Annexure (Questionnaire) | | 10 | Vita | |

Sr. No. | LIST OF TABLES | Page No. | 1. | Economic conditions have changed compared with one year ago | 35 | 2. | Forsee economic conditions one year from now | 38 | 3. | Level of current interest rate | 38 | 4. | Household circumstances | 40 | 5. | Change in income from one year ago | 47 | 6. | Expected income will be one year from now | 50 | 7. | Change in consumption spending compared with one year ago | 51 | 8. | Increase or decrease in spending | 52 | 9. | Plan to increase or decrease in spending within next 12 months | 60 | 10. | Good time to make major outlay | 61 | 11. | Employment scenario | 65 | 12. | Change in overall prices of goods and services compared with one year ago | 67 | 13. | Change in overall rate of price compared with one year ago | 68 | 14. | Direction of prices move from one year ago | 69 | 15. | Change in overall rate of this price increase one year from now | 70 |

Sr. No. | LIST OF GRAPHS | Page No. | 1. | Economic conditions have changed compared with one year ago | 35 | 2. | Forsee economic conditions one year from now | 38 | 3. | Level of current interest rate | 38 | 4. | Household circumstances | 40 | 5. | Change in income from one year ago | 47 | 6. | Expected income will be one year from now | 50 | 7. | Change in consumption spending compared with one year ago | 51 | 8. | Increase or decrease in spending | 52 | 9. | Plan to increase or decrease in spending within next 12 months | 60 | 10. | Good time to make major outlay | 61 | 11. | Employment scenario | 65 | 12. | Change in overall prices of goods and services compared with one year ago | 67 | 13. | Change in overall rate of price compared with one year ago | 68 | 14. | Direction of prices move from one year ago | 69 | 15. | Change in overall rate of this price increase one year from now | 70 |

CHAPTER – 1
INTRODUCTION

INTRODUCTION
Consumer Confidence Index is defined as the degree of optimism on the state of the economy that consumers are expressing through their activities of saving and spending.
Consumer confidence has always been considered a key indicator of economic growth. It is often used as a predictor for household consumption and expenditure. It is understood that consumers who are confident about the current and future state of the country and their own ability to generate finances are likely to increase consumption. In a country like India, it is very important to understand the metrics driving consumer confidence because consumption expenditure accounts for over 60% of India's GDP.
The Consumer Confidence Index gives us a great perspective on the state of the economy and its prospects for growth. The index often forms the cornerstone of financial planning for many commercial, economic and budgeting activities. Therefore is onus is not just to look at the index as a number but, should try to reason out the basis of the metrics used to calculate it.
While the forces that drive consumer confidence were never completely explained, its role in business cycle analysis has increased recently. There is a large consensus today over the power of this index in modelling real consumption in the economy. In fact, many authors have showed that the inclusion of the index have improved forecasts of real consumption.
1.1 Consumer Confidence Index
The U.S. Consumer Confidence Index (CCI) is an indicator designed to measure consumer confidence, Global consumer confidence is not measured. Country by country analysis indicates huge variance around the globe. In an interconnected global economy, tracking international consumer confidence is a lead indicator of economic trends.
In the United States consumer confidence is issued monthly by The Conference Board, an independent economic research organization, and is based on 5,000 households. Such measurement is indicative of consumption component level of the gross domestic product. The Federal Reserve looks at the CCI when determining interest rate changes, and it also affects stock market prices.
The Consumer Confidence Index was started in 1967 and is benchmarked to 1985=100. This year was chosen because it was neither a peak nor a trough. The Index is calculated each month on the basis of a household survey of consumers' opinions on current conditions and future expectations of the economy. Opinions on current conditions make up 40% of the index, with expectations of future conditions comprising the remaining 60%. In the glossary on its website, The Conference Board defines the Consumer Confidence Survey as "a monthly report detailing consumer attitudes and buying intentions, with data available by age, income and region".
The Consumer Confidence Index (CCI) is a monthly release from the Conference Board, a non-profit business group that is highly regarded by investors and the Federal Reserve. CCI is a unique indicator, formed from survey results of more than 5,000 households and designed to gauge the relative financial health, spending power and confidence of the average consumer.
The publication of confidence indices has become an important source of information to business owners and policymakers. These indices, which are regularly reported on, are compiled from surveys which provide a barometer of the sentiments of consumers and business persons in respect to current and future economic conditions. Among other uses, confidence indices help to predict future changes in economic activity. This in turn, helps private and public sector entities to fashion appropriate strategies for the achievement of particular targets such as interest rates or sales. The indices are typically used by policymakers in central banks, government departments, financial institutions, marketing firms and other commercial enterprises as a means of gauging expectations in the economy .There are two main types of sentiment indices: consumer confidence indices and business confidence indices. A consumer confidence index measures how consumers feel about several economic factors. The measure is based on several questions put by an interviewer to the consumer .The result, which is represented by a numerical value, speaks to consumers’ evaluation of their own financial situation, employment chances, expenditure intentions and their opinion on general economic conditions. The index is based on a randomly selected sample of consumers that is representative of the country for which the index is constructed. The computation of the business confidence index essentially follows the same format except that it is the responses of business owners to business-focused questions. These indices may rise or fall from period to period or remain unchanged .The usefulness of consumer confidence indices as tools for forecasting economic performance emanated from the distinct literature of psychological consumption theory. Consumption spending can be the single major determinant of the level, growth and direction of economic activity of a country and as such, it is strategic for policymakers and commercial enterprises to track and forecast consumption expenditure .Consumer confidence indices are not perfect indicators. There may be instances where consumer sentiment runs counter to actual consumer spending. During periods of economic expansion many consumers increase their debt considerably, but are hardly in a position to pay them off quickly when the economy takes a turn for the worse .Notwithstanding, these limitations, consumer confidence indices are useful indicators of consumer expenditure. Indices can add some science to marketing and policy formulation by providing additional data and perspectives on business and on consumer confidence that traditionally have not been available in the region.
1.2 Consumer Confidence Data
Consumer confidence data is extremely important leading indicator for investors given its ability to predict consumer-spending patterns. These spending patterns can be useful predictors for everything from gross domestic product (GDP) growth to the effectiveness of monetary policy in combatting low unemployment and inflation.
Here are a few common uses: * Leading Indicator - Consumer confidence indices can be used as a leading indicator for a broad economic turnaround, including resumed growth in GDP. * Policy Effectiveness - Consumer confidence can be used to gauge the effectiveness of monetary policy, stimulus or other measures used by regulators to jumpstart growth. * Retail Sector - Consumer confidence is particularly important in the retail and luxury goods industries, since their revenues are highly correlated with spending patterns.

Consumer confidence surveys are designed to statistically quantify consumers' confidence in the overall economy and their own personal finances. The surveys consist of a series of questions that are scored and compared to an index value to provide a single key metric showing growth or decline. Consumer confidence data is extremely useful for investors as a leading indicator of economic health, as well as in evaluating individual policies or sectors.
A strong consumer confidence report, especially at a time when the economy is lagging behind estimates, can move the market by making investors more willing to purchase equities. The idea behind consumer confidence is that a happy consumer - one who feels that his or her standard of living is increasing - is more likely to spend more and make bigger purchases.
It is a highly subjective survey, and the results should be interpreted as such. People can grab onto a small situation that garners a lot of mainstream press, such as gas prices, and use that as their basis for overall economic conditions, fair or not. There are no real data sets here, and people are not economists, so they cannot be counted on to realize that, for example, because gas prices may only represent 5% of their expenses, they should not sour their entire economic. Because of its subjective nature and relatively small sample size, most economists will look at moving averages of between three and six months for consumer confidence figures before predicting a major shift in sentiment; some also feel that index level changes of at least five points are necessary before calling for the reversal of an existing trend. In general, however, rising consumer confidence will trend in line with rising retail sales and, personal consumption and expenditures, consumer-driven indicators that relate to spending patterns.
Regional breakdowns of the data are valuable for seeing the breadth of sentiment across the country, which can be a useful factor in the real estate market, along with indicators such as housing starts and existing home sales.
Sentiment indicators can carry a lot of weight - there are so few that are standardized like Consumer Confidence and, in the final analysis, the happiness and spending ability of Joe Consumer is the most important determinant of an expanding economy.

1.3 CONSUMER CONFIDENCE AND SPENDING
The outcome of monthly consumer confidence surveys provides steady fodder for the business and financial press and is treated as an important piece of economic information Despite the widespread attention given to surveys of consumer confidence, the mechanisms by which household attitudes influence the real economy are less well understood. Do consumer confidence surveys contain meaningful independent information about the economy, or do they simply repackage information already captured in other economic indicators? Do the surveys provide information about the future path of household spending, or do they reflect current or past events? Finally, do the surveys correspond neatly to any well-defined economic concept, or do they furnish only a nebulous barometer of household disposition? The most popular survey measures do contain some information about the future path of aggregate consumer expenditure growth. However, much of that information can be found in other popular economic and financial indicators, and the independent information provided by consumer confidence predicts a relatively modest amount of additional variation in future consumer spending. Moreover, there is some evidence that consumer confidence surveys reflect expectations of income and non–stock market wealth growth, but evidence on the connection between these surveys and precautionary saving motives is mixed.

1.4 Interpretation of Consumer Confidence Index

Low confidence indicates that consumers are concerned about the future. They may be worried about job security, pay rises and bonuses. With such a frame of mind, consumers tend to cut spending to basic necessities (e.g. food and services) to free up income for debt repayment.

If confidence is high, consumers tend to incur debt (or reduce savings) and increase spending on discretionary items, such as furniture, household equipment, motor vehicles, clothing and footwear. Some of these items are often financed on credit. Spending on these items decline when confidence is low, as households can generally delay their purchase without experiencing a direct deterioration in living conditions.

A rise in consumer confidence reflects an increased willingness of consumers to spend. However, this willingness only translates into actual sales if consumers’ ability to spend improves their ability to spend depends on their inflation adjusted after-tax income and the availability of credit. A rise in consumer confidence could therefore result in an upturn in household consumption spending in general and retail and motor vehicle sales in particular. The opposite applies when the level of consumer confidence declines.

When consumer confidence falls, the business community grows nervous. But when consumers report feeling good about their own and the nation's economic well-being, sales are expected to rise, stimulating employment and economic growth.

A wide range of business and economic policy-makers take consumer attitude surveys very seriously. At the beginning of 1989, the Bureau of Economic Analysis of the U.S. Department of Commerce revised its Index of Leading Indicators to include the Index of Consumer Expectations, an indicator of how well-off consumers expect to be in the future relative to today. The Data Resources Inc./McGraw Hill (DRI) model of the macro economy uses consumer survey data to effect decisions about housing, claiming that it indirectly affects virtually all other sectors of the economy. The Federal Reserve Board, which controls monetary policy, regularly considers reports about consumer attitudes along with many other phenomena affecting economic growth.

There is, however, considerable confusion about just what these consumer attitude surveys really measure and what they mean for future spending. This stems, in part, from the existence of at least two consumer attitude surveys reported in the press that measure slightly different things. The most commonly reported is the Consumer Confidence Index, compiled by the Industrial Conference Board. It measures the willingness of consumers to make major purchases in the very near term, as does the Index of Current Economic Conditions. The latter is one part of the also widely reported Consumer Sentiment Index, which is compiled by the Survey Research Center of the University of Michigan. The second part of the Consumer Sentiment Index is the Index of Consumer Expectations, which measures how well-off consumers personally expect to be in the future and whether they believe national business and economic conditions will improve.

Interpreting the meaning of the Consumer Sentiment Index is complicated because its two components indicate different spending behavior. When consumers report that they expect to feel better off in the future, current expenditures stagnate as consumers delay purchases until a better time. When they feel relatively well-off today, consumers buy now, boosting current consumer expenditures.
There are three major opinions about the usefulness of these indexes and how they function.
One, which reflects the underlying assumption of the original surveys, suggests that consumers' attitudes and subjective expectations respond to a variety of information and change before buying behavior changes. Thus, consumer sentiment can change directions independent of observable economic phenomena and will lead changes in the economy.
The second opinion is that, at least in normal economic and political times, consumer attitudes simply reflect economic prosperity or adversity and therefore tend to follow observable economic trends.
A third view is that attitude data best measure the degree of uncertainty consumers are feeling. As uncertainty increases, consumers tend to hold their assets in more liquid forms, decreasing spending on durable goods and creating an observable effect on aggregate consumption and long-term investment.
Two sources of uncertainty shown to affect consumers' future expectations are inflation and unemployment. The policy of the Federal Reserve Board to hold down inflation should, then, be correlated with higher consumer expectations about future well-being. But, expecting stable prices, consumers do not rush to buy durable goods in order to beat expected higher prices. Low inflation is a good policy for steady economic growth, but it will not inspire consumers to jump-start the economy.
The usefulness of these indexes of consumer attitudes in predicting future consumer spending has been debated and researched, debunked and praised. Most economists who have tried to incorporate these indexes into their forecasting models have found them to add little to what they already know from other economic data, except in times of great uncertainty, like the 1990s.
Attitudes about current well-being seem to be more useful in predicting consumer spending than future expectations, but forecasting models do not seem to produce consistent results with all scenarios. For the economic forecaster, it is a little like having a mild case of the common cold. You can't afford to ignore it, yet it doesn't seem to change things very much.
Over the past two or three decades these consumer attitude surveys have gained considerable credibility. They provide a very good summary of consumers' perception of the current state of the economy. Consumers' confidence or uncertainty can be affected by a lot of things, such as political news or media personalities, that are not captured by aggregate economic data. It behooves us to watch the various consumer attitude surveys carefully. They are one good indicator of our economy's health.

CHAPTER – 2
REVIEW OF LITERATURE

2. REVIEW OF LITERATURE
Literature review is the process of reading, analyzing, evaluating and summarizing scholarly materials about the specific topic. It is a critical summary and an assessment of the current state of knowledge or current state of the art in a particular field.

2.1 EMRE YILDIRIM & FEYYAZ ZEREN (2014) bought In the Relationship between Consumer Confidence Index and Online Credit Card using The increase in online applications also increases the willingness to expenditures and credit card using. Online shopping inherently includes intangibility and uncertainty. These uncertainties raise several risks for consumers. These risks influence consumption expenditures and usage of expenditure tools negatively in the Internet environment. Consumer confidence index as a trust tool has a very critical role in online credit card using. In this study, it’s concluded that consumer confidence index and online credit card using have an integrated structure. According to the results of these tests, no causality from online credit card using towards consumer confidence index has been found; conversely a temporary causality from consumer confidence index towards online credit card using has. It can be expressed that the reason of this temporary causality from consumer confidence index towards online credit card using is the inclusion of only consumer confidence index as a trust indicator. It is thought factors not included in the model such as systematic, organizational or personal trust also affect online credit card using. In addition, usage of consumer confidence index mostly as an economic indicator and determining of the expenditure and debt trends according to fiscal situation can be shown as a second reason importance between the wealth effect and the information effect in consumer confidence may be spurious. The results also indicate that consumers’ understanding of basic market processes may be more sophisticated than some earlier research might indicate, and their forecasting abilities should not be viewed as simply the result of self-fulfilling prophecy.

2.2 KA SERGEANT( ‎2011) conclude in his paper that the confidence index can predict changes in GDP and remittances and therefore is a useful policy tool in economic forecasting or planning. Consumer confidence is an important factor in the overall economic development of an economy. In fact economic development is driven by consumer demand and not only on the basis of low inflation or macroeconomic stability. Therefore, the level of consumer confidence about future levels of income and job prospects determines the rate of savings, borrowing, spending and investing and also the level of tax revenue in the economy. An optimistic outlook for the economy increases consumer’s confidence about their personal financial situation and hence increases their level of expenditure in the economy. This in turn leads to higher demand which spurs economic growth. Although this paper does not focus on the factors which contribute to consumer confidence, the findings are that consumer confidence helps to predict GDP and remittances. Policymakers should try to create an environment in which consumer confidence is optimal. In addition to these, there should be effective management of fiscal resources and measures should be put in place to mitigate external shocks and improve resilience.

2.3 CASHELL (2009) in his research stated that personal finance is an important criteria on which the consumer confidence can be based on. Availability of personal finance increases his spending and also then he is at ease to take credit which further increases his purchasing power Personal Finance captures the financing options available to the consumer, the expected future changes in real family income of the consumer and the expected trend in the financial condition of the consumer. Personal Finance indices will have high degree of correlation with Consumer Confidence Index as demonstrated using University of Michigan's Index of Consumer Sentiments. When opportunities for personal financing options are higher to a consumer, more likely he is to make purchases. Also easy availability of credit will increase credit off-take by consumers as well as reduce saving rates as the precautionary use of money is reduced. Personal Finance Index therefore forms an important part in a consumers' confidence. Consumer spending is explained partly by consumer attitude. The higher the income, higher will be the consumer confidence, spending by consumers depends on availability of credit and income prospects. The perception of the consumers of the same is likely to have a significant impact on his or her consumption of goods. Thus, personal finance index is often considered a good measure of consumer spending intentions.

2.4 GANDELMAN AND HERNANDEZ-MURILLO (2009) in their research concluded that unemployment in economy shatters the confidence level of consumer ; also they found that inflation though do not affect the level of consumer confidence but when unemployment exists in such economy then current situations may look even worse hence inflation has a latent effect on consumer confidence level. The rate of unemployment has a negative influence on the well-being in the future, whereas the level of inflation has no significant influence. Furthermore, they stated that current unemployment and inflation levels have a negative impact on the current welfare of the consumers, although they tend to have a positive influence on the welfare in the future. Due to the fact that the current situation looks worse than the future.

2.5 SEGERS AND FRANSES (2008) stated through their research that to measure consumer confidence effectively it is important that data for the same is collected at different point of times and on a much regular basis. According to Segers and Franses it is useful to collect data on an ongoing basis in order to discover particular patterns, these time points could also be used to make predictions about the near future. They concluded further that it would be better for the reliability of the consumer confidence indicator to measure the CCI not in months but in weeks (e.g. at the beginning of each week), because this could be an useful indicator for managers in business and industry. Another reason why it is important to collect different time point is due to the fact that the effectiveness of a certain strategy could have different consequences for the short run and long run.

2.6 WILCOX (2007) in his research laid emphasis on factors such as income, wealth and interest rate could accurately determine the propensity of consumer spending on consumption and on saving and for that collection of data from households is a proven source. Forecasting of all macroeconomic variables depend on how accurately household consumption can be modelled and forecasted. Years of research have shown that income, wealth and interest rate movement help to account for the changes in consumption. As a complement to these macroeconomic variables, University of Michigan's Survey Research Centre collects data from households their views on economy's recent, current and future economic and financial conditions. These surveys are intended to provide a measure of how willing the consumer is to spend. The best known measure for consumer confidence in the United States is the Index of Consumer Sentiment (ICS). ICS is still the most popularly used index for economic forecast in the United States due to the large sample size and the long time series data that is available to researchers.
2.7 DION (2006) said that consumer confidence show expectations regarding the future which could be effectively interpreted from the business conditions as business conditions structures the employment level and also determines the pricing for goods and services. Business conditions are the factors which have an impact on the operation of businesses. Consumers are also directly affected by business conditions because the business climate can determine things like pricing for goods and services. An increase in the unemployment is likely to generate an increase in uncertainty among consumers, even among those who are themselves employed. This is likely to increase precautionary savings and decrease confidence and consumption As such, one can expect a negative relationship between unemployment and consumer confidence i.e., the higher the unemployment rate, the lower sentiment and consumption are likely to be. It is often an aggregate of the consumers' perception of macroeconomic indicators of the economy like growth rates, inflation and governments monetary and fiscal policies. Business Conditions index reflects the wariness or the confidence the consumer has in the fundamentals of the economy and how the economy is performing now as well as in the future. Consumer confidence Index also incorporates expectations regarding the future of the economy; such information might be particularly relevant for the intervening period between the announcement of a policy shift and the time it is implemented.

2.8 JANSEN AND NAHUIS (2003) bought pricing of stocks with the level of consumer confidence in the picture In order to study this link they divided the questions of the indexes in two different components (expectations with respect to the financial position of households and expectations about developments of the economy)Jansen and Nahuis were interested in the components that could function as a trigger between the stock prices and the level of consumer confidence.. They concluded that the positive and significant relationship between rising stock prices and the rising consumer confidence is mainly the result of the general expectations about the economy. This means that consumers assume that stock prices reflects future economic conditions.

2.9 STARR MCCLUER (2002) gave the modest wealth effect and said that it is not only the present financial conditions of the person that affect the confidence level but also the wealth he has accumulated over the years affects his spending decisions. Starr Mccluer stated that during the 1990s the increase of wealth boosted the level of consumption and lowered the rate of savings. Although most of the stockholders declared that their spending pattern was not influenced by an increase in stock prices, Starr Mccluer concluded based on the results from Michigan survey that there exists a modest wealth effect.

2.10 DYNAN AND MAKI (2001) belived that increase in income of the consumer has a compounding affect on his spending and also said stock prices should not be made the only base as it would not account in for the households that do not own stocks They stated that an increase of one additional dollar in wealth would result in a higher consumption level of five to fifteen cents, for households that own stocks. Furthermore, they concluded that the role of the indirect wealth effect is rather limited, due to the fact that an increase in consumption of households that do not own stocks is explained more by other variables than a change in stock prices.

2.11 FISHER AND STATMAN (2000) said that the prices of stock outrightly affects the consumer confidence level and they had a direct relation between themselves They concluded that a decline in stock prices is followed by a drop in the level of consumer confidence. According to them, a low confidence level is not necessarily negative news for investors because low confidence levels are often followed by high stock returns than low owns.

2.12 OTOO (1999) in his research emphasized income as an important factor in determining the level of consumer confidence There is a positive relationship between the consumer confidence and income. An increase in the level of consumer confidence could be the result of a better financial position or the expectation that the financial position will increase in the nearby future. With this reasoning in mind, Otoo concluded that the stock market could affect the level of consumer confidence in two ways. First, rising stock prices resulted in a more favourable financial situation than was expected and this will boost the level of consumer confidence directly (traditional wealth effect). Secondly, rising stock market induce consumers to spend more because future prospects look promising.

2.13 MALLEY AND MOUTOS (1996)concluded in his research that confidence level of consumer is shaken with the level of unemployment in the economy.This uncertainity in the level of unemployment impacts the saving and consumtion decisions largely in the segment of working class. Malley and Moutos noticed that among the working class the income uncertainty increases when the unemployment level is rising, whereas the income uncertainty among wealthier group (e.g. doctors, lawyers and professors) is hardly affected by this increase in unemployment. Furthermore, they stated that if the uncertainty increases among the same individuals will have a larger impact on savings and consumption decisions. The reasoning behind is that risk-averse consumers are willing to step up their savings and reduce their consumption. Based on these factors Malley and Moutos stated that the level of unemployment is one of the key determinants in order to explain the income uncertainty among the majority of the population. They concluded that an increase in income uncertainty would result in a drop in consumption whereas it boosts the level of savings.

2.14 ROMER (1990) stated in his research that the level of prices in stock prices is a important character in forming the perceptions among the consumers. Romer has used the level of consumer confidence in order to explain the Great Depression. This period could be characterized as follows, the stock market crashed in 1929 and the recovery of this period was associated with high volatility. Due to these two factors the uncertainty among the consumers increased rapidly, what resulted in a drop in consumer confidence and this led to a decrease in consumer expenditure. According to Romer the level of consumer confidence and the volatility in stocks seems to be contemporaneously correlated.

Consumer Confidence Survey: March 2015

The Consumer Confidence Survey provides an assessment of the perception of respondents spread across six metropolitan cities viz., Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi. The survey captures qualitative information from respondents on their perceptions on general economic conditions and own financial situation on a 3-point scale viz. improve, remain same or worsen. The assessments are analysed in two parts, viz., current situation as compared with a year ago and expectations for a year ahead. The survey questionnaire was rationalised in this round. With the exclusion of questions on household circumstances from this round, Current Situation Index (CSI) and Future Expectations Index (FEI) for previous rounds have been recalculated and comparable data has been presented. The salient findings of the survey, conducted during the last week of February 2015 and first week of March 2015 based on the response of around 5,400 respondents are presented below.

Highlights:

* The current round of the Consumer Confidence Survey reflects improvement in terms of Current Situation Index (CSI) and Future Expectations Index (FEI). The CSI has gradually improved over the last four quarters from 98.6 to 108.6. The FEI after remaining at around 118 during the last three rounds of survey, increased to about 127 due to improvement in positive perceptions on future economic conditions and future spending (Chart 1).

Chart 1: Consumer Confidence Indices

| 130 | | | | | | | | | | | | 126.7 | | | 120 | | | | | | 109.7 | 117.7 | | | | | | | | | | | | | | | 118.3 | | | Index | | | | | | | | | 118.6 | | | | | 110 | | | | | 96.9 | | | | | 108.6 | | | | | | | | | | | | | 105.5 | | | | 100 | | | | | | | | | | | | | | | | | | | 87.7 | | 98.6 | | 103.1 | | | | | 90 | | | | | 91.6 | | | | | | | | | | | | | 87.2 | | | 98.6 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 80 | | | | | | | | | | | | | | | Sep | Dec | Mar | Jun | Sep | Dec | Mar | | Jun | Sep | Dec | Mar | | | | 2012 | | 2013 | | | | 2014 | | 2015 | | | | Current Situation Index | | Future Expectation Index | | | |

Note: Current as well as future household circumstances have been dropped from the questionnaire from March 2015 round onward. The CSI and FEI are therefore modified accordingly.

* Net response of current economic conditions as compared to one year ago has shown improvement in the last four rounds of the survey. Also, positive perceptions on future economic conditions which were declining in the last three rounds, has shown a turnaround in this quarter (Table 1).

* The positive perceptions regarding income appear to be declining from September 2014 onwards the net response on income in the current period as well as that 1-year ahead have recorded fall in March 2015 (Table 2).

* The net response on current spending continued to remain at above 70 per cent. As regards future spending, nearly 78 per cent respondents expect an increase in 1-year ahead period (Table 3).

* This is the first time that the views of the respondents on essential and non-essential spending of their household have been ascertained. More than 80 per cent of the respondents reported increase in the current as well as future spending perceptions on essential items. However, the proportion of respondents who reported increase in current and future perceptions on non-essential spending is much lower at around 40 per cent.

* Employment outlook worsened in this round as compared to previous round of survey but still more than 50 per cent of respondents expect improvement in employment situation 1-year ahead (Table 4).

* As regards price levels and inflation, current sentiments show improvement in this round of survey. However, perceptions on future price levels as well as inflation reflect deterioration in positive sentiments. (Tables 5 and 6).

Table 1: Perceptions on Economic Conditions

(Percentage responses)

| Compared with 1-year ago | | 1-year ahead | | | | | | | | | | | | Jun-14 | Sep-14 | Dec-14 | Mar-15 | Jun-14 | Sep-14 | Dec-14 | Mar-15 | Improve | 25.5 | 29.3 | 30.2 | 41.7 | 56.7 | 54.8 | 50.9 | 56.8 | | | | | | | | | | Remain same | 34.6 | 32.1 | 41.2 | 32.4 | 25.6 | 28.1 | 32.3 | 26.8 | | | | | | | | | | Worsen | 39.9 | 38.7 | 28.6 | 25.9 | 17.6 | 17.1 | 16.8 | 16.4 | | | | | | | | | | Net Response | -14.4 | -9.4 | 1.6 | 15.8 | 39.1 | 37.7 | 34.1 | 40.4 | | | | | | | | | |

Table 2: Perceptions on Income

(Percentage responses)

| Compared with 1-year ago | | | 1-year ahead | | | | | | | | | | | | Jun-14 | Sep-14 | Dec-14 | Mar-15 | Jun-14 | Sep-14 | Dec-14 | Mar-15 | Increase | 39.1 | 47.2 | 38.7 | | 35.4 | 63.9 | 67.0 | 59.8 | 55.4 | | | | | | | | | | | Remain same | 46.7 | 38.4 | 48.0 | | 46.1 | 30.8 | 27.8 | 35.1 | 35.5 | | | | | | | | | | | Decrease | 14.3 | 14.4 | 13.2 | | 18.5 | 5.2 | 5.1 | 5.1 | 9.1 | | | | | | | | | | | Net Response | 24.8 | 32.7 | 25.5 | | 16.9 | 58.7 | 61.9 | 54.7 | 46.3 | | | | | | | | | | |

Table 3: Perceptions on Spending

(Percentage responses) | | | Compared with 1-year ago | | | | | 1-year ahead | | | | | | | | | | | | | | | | | | | | | | | | | | | Jun-14 | Sep-14 | Dec-14 | Mar-15 | Jun-14 | | Sep-14 | | Dec-14 | | Mar-15 | | Increase | 77.1 | 78.1 | 75.7 | 80.0 | 36.3 | | 41.9 | 35.6 | 78.3 | | | | | | | | | | | | | | | | | | | | | Remain same | 16.0 | 18.2 | 20.0 | 13.7 | 32.6 | | 28.6 | 35.3 | 15.8 | | | | | | | | | | | | | | | | | | | | | Decrease | 6.8 | 3.8 | 4.3 | 6.3 | 31.2 | | 29.5 | 29.2 | 6.0 | | | | | | | | | | | | | | | | | | | | | | Net Response | 70.3 | 74.3 | 71.4 | 73.7 | 5.1 | | 12.4 | 6.4 | 72.3 | | | | | | | | | | | | | | | | | | | | | | | | | | | Table 4: Perceptions on Employment | | | | | | | | | | | | | | | | | | | | | | | (Percentage responses) | | | | | Compared with 1-year ago | | | | | 1-year ahead | | | | | | | | | | | | | | | | | | | | | Jun-14 | Sep-14 | Dec-14 | Mar-15 | Jun-14 | | Sep-14 | Dec-14 | Mar-15 | | Improve | | 30.8 | | 36.0 | | 36.1 | | 37.6 | | 65.1 | | | 61.4 | | 61.1 | | 55.8 | | | | | | | | | | | | | | | | | | | | | Remain Same | | 39.0 | | 35.3 | | 39.7 | | 35.3 | | 24.8 | | | 29.0 | | 29.7 | | 28.7 | | | | | | | | | | | | | | | | | | | | | Worsen | | 30.2 | | 28.7 | | 24.1 | | 27.2 | | 10.1 | | | 9.5 | | 9.3 | | 15.5 | | | | | | | | | | | | | | | | | | | | | Net Response | | 0.6 | | 7.3 | | 12.0 | | 10.4 | | 54.9 | | | 51.9 | | 51.8 | | 40.3 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Table 5: Perceptions on Price Level

(Percentage responses)

| Compared with 1-year ago | | 1-year ahead | | | | | | | | | | | | Jun-14 | Sep-14 | Dec-14 | Mar-15 | Jun-14 | Sep-14 | Dec-14 | Mar-15 | Increase | 89.7 | 92.1 | 85.1 | 78.8 | 76.7 | 77.6 | 66.7 | 73.9 | | | | | | | | | | Remain same | 8.8 | 5.1 | 12.6 | 16.0 | 16.1 | 15.8 | 22.2 | 17.7 | | | | | | | | | | Decrease | 1.5 | 2.8 | 2.3 | 5.2 | 7.2 | 6.6 | 11.1 | 8.4 | | | | | | | | | | Net Response | -88.2 | -89.2 | -82.8 | -73.6 | -69.5 | -71.0 | -55.6 | -65.5 | | | | | | | | | |

Table 6: Perceptions on rate of change in Price Levels (Inflation)

(Percentage responses)

| Compared with 1-year ago | | 1-year ahead | | | | | | | | | | | | Jun-14 | Sep-14 | Dec-14 | Mar-15 | Jun-14 | Sep-14 | Dec-14 | Mar-15 | Increase | 87.1 | 88.2 | 81.9 | 82.5 | 84.0 | 85.9 | 81.0 | 83.5 | | | | | | | | | | Remain Same | 11.1 | 10.2 | 15.9 | 13.7 | 14.5 | 13.1 | 16.9 | 12.7 | | | | | | | | | | Decrease | 1.8 | 1.6 | 2.2 | 3.8 | 1.5 | 1.1 | 2.1 | 3.7 | | | | | | | | | | Net Response | -85.4 | -86.6 | -79.8 | -78.7 | -82.4 | -84.8 | -78.8 | -79.8 | | | | | | | | | |

NEED OF THE STUDY The study was conducted to get the summary of responses of the individuals against different parameters though the survey is conducted by RBI at national level and also the survey is available for major cities but a need was felt to conduct the survey in growing city such as Ludhiana.
Manufacturers, retailers, banks and the government monitor changes in the CCI in order to factor in the data in their decision-making processes. While index changes of less than 5% are often dismissed as inconsequential, moves of 5% or more often indicate a change in the direction of the economy.
A rising trend in consumer confidence indicates improvements in consumer buying patterns. Manufacturers can increase production and hiring. Banks can expect increased demand for credit. Builders can prepare for a rise in home construction and government can anticipate improved tax revenues based on the increase in consumer spending.

CHAPTER – 3
OBJECTIVES OF THE STUDY

OBJECTIVES OF THE STUDY
1. To know inflation expectations of residents of Ludhiana
2. To know the expected rise or fall in standard of living of residents of Ludhiana
3. To know the expected rise or fall in economic conditions of residents of Ludhiana

CHAPTER – 4
RESEARCH METHODOLOGY

4.1 RESEARCH METHODOLOGY
Research methodology is a way to systematically solve the research problem. It is a science of studying how research is done scientifically and identifiably.
As calculated by RBI:
Current Situation Index & Future Expectations Index
To combine the consumer in the standard opinion surveys, respondents generally have three reply options such as up/same/ down; or above-normal/normal/below-normal; or increase/remain-same/decrease. Because of the difficulty of interpreting all three percentages, the survey results are normally converted into a single quantitative number. One of the most common way of doing this is to use ‘Net-Responses’ (also called ‘Balances’ or ‘Net Balances’). It is defined as the percentage of the respondents reporting a decrease, subtracted from the percentage reporting an increase. Net Responses can take values from –100 to +100. In this survey, Net Response is used to analyse the Consumer Confidence Survey results and to track the movements of various parameters.
To combine the consumer confidence perceptions on various parameters, two indices are worked out. These are Current Situation Index and Future Expectations Index. While calculating the index, the following formula has been used:- Overall Index = 100 + Average (Net Response of selected factors) |
Where Net Response = Positive perceptions (%) – Negative perception (%)
The average net responses on the current perception on various factors viz. economic conditions, house hold circumstances, Income, Spending and Price level are used for the calculation of the Current Situation Index.
The average net responses on the future perceptions on various factors viz. economic conditions, income, spending, price level and employment are used for the calculation of the Future Expectations Index.

4.2 Research design Research design involves a general plan of how to go about answering the research questions set keeping in mind the research objective. It’s a framework or a blueprint for conducting the research project. It details the information needed to structure or solve research problem at hand. In this way research lays the foundation for conducting the research project
The research design is Descriptive in nature since the research laid emphasis on the factors influencing consumption and investment decisions of the people
4.3 Sampling technique In the research I have used Convenience Sampling technique for my Research.
It is a type of sampling technique in which the researcher according to his convenience selects various sampling units. Often those elements are selected in the sample, which happens to be in the right place and at right time
4.4 Sampling design
Sample size: 100
Area of study: City area of Ludhiana
4.5 Data collection The task of data collection begins after a research problem has been defined and the objective has been clearly stated along with research design has been chalked out. The data collection would be:
4.5.A Primary data- It’s the data which are collected a fresh and for the first time and thus happens to be original in character. Under my research Primary data has been gathered through Questionnaire; collected from sample respondents through with the help of interview
4.6 Respondents Number of respondents would be equally divided on the basis of gender; subdivided on the basis of working and non working and further categorized into business and service class.

CHAPTER – 5
DATA ANALYSIS
&
INTERPRETATION

Data Analysis and Interpretation

The process of evaluating data using analytical and logical reasoning to examine each component of the data provided. This form of analysis is just one of the many steps that must be completed when conducting a research experiment. Data from various sources is gathered, reviewed, and then analyzed to form some sort of finding or conclusion.

The data entails that the data is break down into constituent parts to obtain the answers to research questions and to test hypothesis.

The purpose of interpreting the data is to reduce it into an intelligible and interpretable form so that relations of research problems can be studied tested and conclusions drawn.

To analysis the data which is received in the form of Questionnaires, the data is divided into two parts and analyzed separately. * The current perception on various factors viz. economic conditions, house hold circumstances, Income, Spending and Price level are used for the calculation of the Current Situation Index. * The future perceptions on various factors viz. economic conditions, income, spending, price level and employment are used for the calculation of the Future Expectations Index.
5.1 Economic conditions have changed compared with one year ago
Table No.5.1 Improved | 65 | 74.7% | Remained the same | 18 | 20.7% | Worsen | 4 | 4.6% |

Graph No.5.1

ANALYSIS
The above graph shows that 74.7% of the respondents believe that economic conditions have improved compared to that of a year ago 20.7% say that it has remained the same and 4.6% say that it has got worsen.
INTERPRETATION
We can interpret that most of the people believe that economic conditions would improve in near future though 20.7 per cent of people feel that it has remained the same, overall there is positive outlook for the economy.
5.1.A The basis on which people think about economic conditions
Table No. 5.1.A Media Reports | 54 | 60% | Economic indicators and statistics | 18 | 20% | Business performance of the company I work for, or of my own company | 7 | 7.8% | Income level for myself or other family members | 8 | 8.9% | Bustle of shopping streets and amusement quarters | 3 | 3.3% |

Graph No.5.1.A

ANALYSIS
The above graph shows that 60% of the respondents answered the question-1 on the basis of the media reports they read, 20% answered on the basis of the economic indicators and statistics, 7.8% said on the basis of business performance of the company they work for, or of their own company, 8.9% of them said on the basis of income level for themselves or other family members and 3.3% of the respondents answered on the basis of bustle of shopping streets and amusement quarters.
INTERPRETATION
We can say that media reports has created a great impact on the mindset of the people about positive changes in the economy furthermore the political changes “Modi Sarkar” and media buzzing the party as business friendly created all the change, also the economic indicators are showing a upward graph which has made people to believe that a positive economic outlook could be seen soon.
5.2 Foresee economic conditions one year from now
Table No. 5.2 Will improve | 63 | 75% | Will remain the same | 18 | 21.4% | Will worsen | 3 | 3.6% |

Graph No.5.2

ANLAYSIS The above graph shows that foreseeing the economic condition 75% of respondents said that it will improve, 21.4% of them said that it will remain the same and 3.6% said that it will become worsen.
INTERPRETATION
Majority of the people are confident about positive outlook of economy one year from now and only three percent of the people feel that the economy would be at less better stage one year from now.
5.3 Level of current interest rate considering the current economic conditions
5.3.A From borrower’s point of view
Table No.5.3.A Is low | 6 | 7.3% | Is appropriate | 23 | 28% | Is high | 53 | 64.6% |

Graph No.5.3.A

ANLAYSIS
The above graph shows that 64.6% of the respondents said that the level of current interest rate is high considering the current economic conditions, 28% said it’s appropriate and 7.3% said that it is low.
INTERPRETATION
The majority of borrowers think that current interest rate is high except few who think its low.
5.3.B From depositor’s point of view
Table No.5.3.B Is low | 48 | 51.6% | Is appropriate | 32 | 34.4% | Is high | 13 | 14% |
Graph No.5.3.B

ANLAYSIS The above graph shows that according to depositor’s point of view 51.6% of the respondents said level of current interest rate is low considering the current economic conditions, 34.4% said it’s appropriate and 14% said that it is high.
INTERPRETATION
The majority of depositors think that current interest rate is low except few who think it is high.
5.4 Household circumstances
5.4.A Compared with one year ago
Table No.5.4.A Become somewhat better off | 47 | 48.5% | Difficult to say | 43 | 44.3% | Become somewhat worse off | 7 | 7.2% |

Graph No.5.4.A

ANLAYSIS
The above graph shows that 48.5% of respondents believe that household circumstances have become somewhat better off, 44.3% difficult to say opinion on it and 7.2% say that it has become somewhat worse off.

INTERPRETATION
About 48.5% of the respondents believe that their household conditions have become better some of them feel that inflation is in control now whereas 44.3% say that it is difficult to say at this point of time.
5.4.B Expectation of one year from now
Table No.5.4.B Will be better off | 60 | 72.3% | Will remain the same | 19 | 22.9% | Will be worsen | 4 | 4.8% |

Graph No.5.4.B

ANALYSIS
The above graph shows that 72.3% of respondents believe that household circumstances will be better off, 22.9% difficult to say opinion on it and 4.8% say that it will be worsen. INTERPRETATION
About 72.3% of the respondents believe that their household conditions will be better, some of them feel that inflation will be in control whereas 22.9% say that it is difficult to say at this point of time.

5.4.C Household circumstances have/will become better /worse off
5.4.C.a Salary and business income
Table No.5.4.C.a As compared to one year ago | Increased | 51 | 66.2% | As compared to one year ago | Decreased | 11 | 14.3% | One year from now | Will increase | 13 | 16.9% | One year from now | Will decrease | 2 | 2.6% |
Graph No.5.4.C.a

ANLAYSIS The above graph shows that 66.2% of respondents say that the salary and business income has been increased compared to one year ago and 14.3% say that it has been decreased and 16.9% say that it will increase one year from now and 2.6% say that it will decrease.
INTERPRETATION
A large population believes that their income from business has increased and they hope for further growth in business due to government efforts for business investments, ease of doing business etc

5.4.C.b Income from interest/dividend
Table No.5.4.C.b As compared to one year ago | Increased | 23 | 44.2% | As compared to one year ago | Decreased | 13 | 25% | One year from now | Will increase | 15 | 28.8% | One year from now | Will decrease | 1 | 1.9% |

Graph No.5.4.C.b ANALYSIS The above graph shows that 44.2% of respondents said that the income from interest/dividend has increased as compared to one year ago and 25% said that it has decreased whereas 28.8% said that it will increase one year from now and 1.9% said that it will decrease.
INTERPRETATION
Respondents gave a mix response on income from dividends though 44.2 percent of them have said that the income has increased but 28.8 percent of them feel that it would further increase even when they are positive about economic growth, on the other side bunch of people do believe that dividend would decrease
5.4.C.c Special income from sales of real estate
Table No.5.4.C.c As compared to one year ago | Increased | 24 | 44.4% | As compared to one year ago | Decreased | 13 | 24.1% | One year from now | Will increase | 14 | 25.9% | One year from now | Will decrease | 3 | 5.6% |

Graph No.5.4.C.c

ANALYSIS
The above graph shows that 44.4% of respondents said that the special income from sales of real estate has increased as compared to one year ago and 24.1% said that it has decreased whereas 25.9% said that it will increase one year from now and 5.6% said that it will decrease.
INTERPRETATION
Considerable number of respondents said that they do have recorded capital gain from real estate and it has increased over a year ago and people are in a hope that it would increase further.
5.4.C.d Prices
Table No.5.4.C.d As compared to one year ago | Increased | 24 | 64.9% | As compared to one year ago | Decreased | 6 | 16.2% | One year from now | Will increase | 6 | 16.2% | One year from now | Will decrease | 1 | 2.7% |

Graph No.5.4.C.d

ANALYSIS
The above graph shows that 64.9% of respondents said that the prices has increased as compared to one year ago and 16.2% said that it has decreased whereas 16.2% said that it will increase one year from now and 2.7% said that it will decrease.
INTERPRETATION
More than half of the respondents said that the prices has gone up which is a very general observation be it be any economy and also the number of respondents who believe that prices would increase is much more then respondents who believe that price would decrease in one year from now.
5.4.C.e The value of real estate and stocks
Table No.5.4.C.e As compared to one year ago | Increased | 23 | 43.4% | As compared to one year ago | Decreased | 22 | 41.5% | One year from now | Will increase | 8 | 15.1% | One year from now | Will decrease | 0 | 0% |

Graph No.5.4.C.e ANALYSIS
The above graph shows that 43.4% of respondents said that the value of real estate and stocks has increased as compared to one year ago and 41.5% said that it has decreased whereas 15.1% said that it will increase one year from now and 0% said that it will decrease.
INTERPRETATION
Around forty four percent of the respondents were of the view that value of real estate has increased over period of years and would further increase in the coming years.
5.4.C.f The number of dependents in my family
Table No.5.4.C.f As compared to one year ago | Increased | 20 | 48.8% | As compared to one year ago | Decreased | 10 | 24.4% | One year from now | Will increase | 9 | 22% | One year from now | Will decrease | 2 | 4.9% |

Graph No.5.4.C.f

ANALYSIS
The above graph shows that 48.8% respondents said that the number of dependents in their family has increased as compared to one year ago and 24.4% said that it has decreased whereas 22% said that it will increase one year from now and 4.9% said that it will decrease.
INTERPRETATION
Respondents believed that the per head expenses of the members is much more then the fixed expenses and is one of the reason in determining their spending levels.
5.5 Change in income (or/and other family members' income) from one year ago
Table No.5.5 Increased | 48 | 53.3% | Remained the same | 34 | 37.8% | Decreased | 8 | 8.9% |

Graph No.5.5

ANALYSIS
The above graph shows that 76.8% of respondents said that the income has increased as compared to one year ago and 18.3% said that it has remained the same and 4.9% said that it has decreased.
INTERPRETATION
A good number of respondents were of the view that there is increase in their total income compared to a year ago while others said there is no considerable increase to be accounted.
5.6 Expected income (or other family members' income) will be one year from now
Table No.5.6 Increase | 63 | 76.8% | Remain the same | 15 | 18.3% | Decrease | 4 | 4.9% |

Graph No.5.6

ANALYSIS
The above graph shows that 76.8% of respondents said that the income will increase one year from now and 18.3% said that it will remain the same and 4.9% said that it will decrease.
INTERPRETATION
Majority of the people had a positive economic outlook, they would also grow with growing economy specially the business class and eighteen percent could not make out and said it has remained the same.
5.7 Change in consumption spending compared with one year ago
Table No.5.7 Increased | 61 | 70.9% | Remained the same | 21 | 24.4% | Decreased | 4 | 4.7% |

Graph No.5.7

ANALYSIS
The above graph shows that 70.9% of respondents said that the spending has increased as compared to one year ago and 24.4% said that it has remained the same and 4.7% said that it has decreased.
INTERPRETATION
Majority of the respondents were of the view that their spending has increased and this spending majority consisted of consumption expenditure, on the other hand small portion of the respondents admitted that they are on way of controlling their expenditure and hence it accounted in decrease in their expenditure
5.8 Increase /decrease in spending due to following factors
5.8.A Income
Table No.5.8.A Increased | 31 | 83.8% | Decreased | 6 | 16.2% |

Graph No.5.8.A

ANALYSIS
The above graph shows that increase/decrease in spending due to increase in income of 83.8% of respondents and increase/decrease in spending due to decrease in income of 16.2% of the respondents.
INTERPRETATION
Personal finance is one of the most important factors in determining the spending pattern as it gives a comfortable level and increase in income may further increase the confidence of the consumer to spend and he could even then take credit to spend on the consumer durables.
5.8.B Future income
Table No.5.8.B Increased | 36 | 83.7% | Decreased | 7 | 16.3% |
Graph NO.5.8.B

ANALYSIS The above graph shows that future spending could increase/decrease due to increase in income of 83.7% of respondents and could increase/decrease due to decrease in future income of 16.3% of the respondents. INTERPRETATION Respondents said that their spending are high because they are expecting increase in level of their income in near future, most of the respondents had a optimistic view for the economy. 5.8.C Value of non-financial assets such as real estate Table No.5.8.C Increased | 16 | 66.7% | Decreased | 8 | 33.3% | Graph No.5.8.C ANALYSIS
The above graph shows that future spending could increase/decrease due to increase in the value of non-financial assets such as real estate of 66.7% of respondents and could increase/decrease due to decrease in the value of non-financial assets such as real estate of 33.3% of the respondents.

INTERPRETATION
This analysis gives an idea of modest wealth effect and proves that respondents level of consumer confidence increase not only due to present conditions but also due to the wealth accumulated overtime.
5.8.D Value of financial assets such as Stocks and Mutual Funds
Table No.5.8.D Increased | 26 | 78.8% | Decreased | 7 | 21.2% |

Graph No.5.8.D ANALYSIS
The above graph shows that future spending could increase/decrease due to increase in the value of financial assets such as Stocks and Mutual Funds of 78.8% of respondents and could increase/decrease due to decrease in the value of financial assets such as Stocks and Mutual Funds of 21.2% of the respondents.
INTERPRETATION
Increase in the value of financial assets helps in boosting the confidence level of the people and hence affects their spending decisions.

5.8.E Income from bonds and Fixed Deposits
Table No.5.8.E Increased | 12 | 54.5% | Decreased | 10 | 45.5% |
Graph No.5.8.E

ANALYSIS
The above graph shows that future spending could increase/decrease due to increase in the income from bonds and Fixed Deposits of 54.5% of respondents and could increase/decrease due to decrease in the income from bonds and Fixed Deposits of 45.5% of the respondents.
INTERPRETATION
Income from bonds and fixed deposits raise the level of consumer’s income and hence increase their purchasing power which results in boosting of consumer confidence level .
5.8.F Expenditure for real estate (purchase/maintenance) such as a house
Table No.5.8.F Increased | 22 | 71% | Decreased | 9 | 29% |

Graph No.5.8.F

ANALYSIS
The above graph shows that future spending could increase/decrease due to increase in the expenditure for real estate (purchase/maintenance) such as a house of 71% of respondents and could increase/decrease due to decrease in the expenditure for real estate (purchase/maintenance) such as a house of 29% of the respondents
INTERPRETATION
Majority of the respondents said that their spending may increase due to expenditure for real estate as now they find it a right time to invest in real estate.
5.8.G Expenditure towards consumer durable goods
Table No.5.8.G Increased | 38 | 88.4% | Decreased | 5 | 11.6% |

Graph No.5.8.G

ANALYSIS
The above graph shows that future spending could increase/decrease due to increase in expenditure towards consumer durable goods of 88.4% of respondents and could increase/decrease due to decrease in the expenditure towards consumer durable goods of 11.6% of the respondents.
INTERPRETATION
Around eighty percent of the people said that that their spending on consumer durables may increase due to increase in prices of consumer durables.
5.8.H Spending due to number of dependents in a family
Table No.5.8.H Increased | 31 | 83.8% | Decreased | 6 | 16.2% |

Graph No.5.8.H

ANALYSIS
The above graph shows that future spending could increase/decrease due to increase in spending due to number of dependents in family of 83.8% of respondents could increase/decrease due to decrease in the spending due to number of dependents in family of 16.2% of the respondents
INTERPRETATION
Respondents accepted that expenditure do increase with every member in the family per head expenses amount to major portion of spending such as school fees of children.
5.8.I Cost of consumer goods
Table No.5.8.I Increased | 35 | 79.5% | Decreased | 9 | 20.5% |

Graph No.5.8.I

ANALYSIS
The above graph shows that future spending could increase/decrease due to increase in the cost of consumer goods of 79.5% of respondents and could increase/decrease due to decrease in the cost of consumer goods of 20.5% of the respondents.
INTERPRETATION
Increase/decrease in prices of goods do affect the spending patterns and this affects almost eighty percent of the respondent.

5.8.J Cost of services
Table No.5.8.J Increased | 37 | 90.2% | Decreased | 4 | 9.8% |

Graph No.5.8.J

ANALYSIS
The above graph shows that future spending could increase/decrease due to increase in the cost service of 90.2% of respondents and could increase/decrease due to decrease in the cost of service of 9.8% of the respondents
INTERPRETATION
About ninety percent of the population said that spending would get affected due to hike in cost of services and with this budget there is increase in service tax which would further affect cost of services .
5.9 Plan to increase or decrease spending within the next twelve months
Table No.5.9 Increase | 56 | 67.5% | Neither increase nor decrease | 21 | 25.3% | Decrease | 6 | 7.2% |

Graph No.5.9

ANALYSIS
The above graph shows that 67.5% of respondents have plan to increase the spending, 25.3% want to remain constant and 7.2% have the plan to decrease the spending within next twelve months.
INTERPRETATION
More than half of the respondents were positive about hike in their earnings hence they planned to increase their spending and only few respondents were of view to decrease their spending.
5.10 Good time to make major outlay for the following items:
5.10.A Motor vehicle
Table No.5.10.A Yes | 55 | 71.4% | Can’t say | 13 | 16.9% | No | 9 | 11.7% |

Graph No.5.10.A

ANALYSIS
The above graph shows that 71.4% of respondents say yes to make major outlay for motor vehicle, 16.9% have not decided and 11.7% said no to make any major outlay for it.
INTERPRETATION
Around seventy percent of the respondents are ready to make outlay for motor vehicle as they have reported increase in income and rest of them are not sure of investing in motor vehicles.
5.10.B House
Table No.5.10.B Yes | 30 | 34.1% | Can’t say | 48 | 54.5% | No | 10 | 11.4% |

Graph No.5.10.B

ANALYSIS
The above graph shows that 34.1% of respondents say yes to make major outlay for house, 54.5% have not decided and 11.4% said no to make any major outlay for it.
INTERPRETATION
Respondents are not fully confident to invest in housing property as they believe that it is not right time to invest in property.
5.10.C Durable Goods( other than motor vehicle)
Table No.5.10.C Yes | 49 | 69% | Can’t say | 17 | 23.9% | No | 5 | 7% |

Graph No.5.10.C

ANALYSIS
The above graph shows that 69% of respondents say yes to make major outlay for durable goods, 23.9% have not decided and 7% said no to make any major outlay for it.
INTERPRETATION
A large part of residents are ready to make major outlay for durable goods and almost 23.9% have not decided to invest in durable goods.
5.10.D Gold/bullion
Table No.5.10.D Yes | 27 | 35.1% | Can’t say | 43 | 55.8% | No | 7 | 9.1% |

Graph No.5.10.D

ANALYSIS
The above graph shows that 35.1% of respondents say yes to make major outlay for gold/bullion, 55.8% have not decided and 9.1% said no to make any major outlay for it.
INTERPRETATION
Most of the respondents were not confident to bet on gold /bullion and only a small chunk of respondents were ready to make major outlay on gold/bullion.
5.11 Employment Scanario
5.11.A As compared to one year ago
Table No.5.11.A Improved | 50 | 59.5% | Remained the same | 28 | 33.3% | Worsen | 6 | 7.1% | Graph No.5.11.A

ANALYSIS
The above graph shows that 59.5% of respondents said that the employment has improved as compared to one year ago and 33.3% said that it has remained the same and 7.1% said that it has become worsen.
INTERPRETATION
Above gives a impression that people feel that employment has improved compared to year ago the growth has taken place but factors such as employment would improve with time hence if 59.5% believe it has improved 33.3% do believe that it has remained the same or has got even worsen.
5.11.B Situation one year from now
Table No.5.11.B Will improve | 63 | 75% | Will remain the same | 15 | 17.9% | Will worsen | 6 | 7.1% |

Graph No.5.11.B

ANALYSIS
The above graph shows that 75% of respondents said that the employment will be improved one year from now and 17.9% said that it will remain the same and 7.1% said that it will become worsen.
INTERPRETATION
With a progressive economy ahead people do believe to get more employment opportunities, growing number of business houses and investments by foreign investors has made people to expect employment scenario to improve in a year from now.
5.12 Change in overall prices of goods and services compared with one year ago
Table No.5.12 Gone up | 68 | 81.9% | Remained almost unchanged | 13 | 15.7% | Gone down | 2 | 2.4% |
Graph No.5.12

ANALYSIS
The above graph shows that 81.9% of respondents said that the prices of overall goods and services has gone up, 15.7% say that it has been unchanged and 2.4% said that it has gone down.
INTERPRETATION
A large chunk of people feel that overall prices of goods and services has gone up during the last year and only fifteen percent of the respondents feel that the prices are same as that of last year.
5.13 Change in overall rate of this price increase compared with one year ago
Table No.5.13 More than last year | 56 | 82.4% | Same as last year | 11 | 16.2% | Less than last year | 1 | 1.5% |
Graph No.5.13

ANALYSIS
The above graph shows that 82.4% of the respondents said that overall rate of price increase has become more than the last year,16.2% of them said that it has been same as last year and 1.5% of them said that it has become lesser than last year.
INTERPRETATION
As compared to the last year the prices have gone up and this is a general perception that prices go up every year there is no exception to this statement be it any economy.
5.14 Direction of prices move one year from now
Table No.5.14

Will go up | 60 | 77.9% | Will remain almost unchanged | 14 | 18.2% | Will go down | 3 | 3.9% |
Graph No.5.14

ANALYSIS
The above graph shows that 77.9% of respondents said that direction of price will go up one year from now, 18.2% said that it will remain almost the same and 3.9% of them said it will go down.
INTERPRETATION
It could be seen that respondents expect rise in prices of goods and services though oil prices have seen a decline but the population is smart to understand that this is short term and prices would shoot one year from now
5.15 Change in Overall rate of this price increase one year from now
Table No.5.15 More than current year | 57 | 78.1% | Same as current year | 15 | 20.5% | Less than current year | 1 | 1.4% |
Graph No.5.15

ANALYSIS
The above graph shows that 78.1% of the respondents said that change in overall rate of price one year from now will be more than the current year, 20.5% of them said that it will remain same and 1.4% of them said that it will be lesser than the current year.
INTERPRETATION
Above gives a insight that a major part of population feels that the overall rate of prices would increase one year from now with growing economy, they also expect prices to rise.

Present Expectation Index
Net responses measured against the selected parameters: * Economic conditions
Net Responses=positive perception (%)-negative perception (%) =74.7%-4.6% =70.1%

* Household circumstances

Net Responses=positive perception (%)-negative perception (%) =48.5%-7.2% =41.3% * Income

Net Responses=positive perception (%)-negative perception (%) =53.3%-8.9% =44.4%

* Spending

Net Responses=positive perception (%)-negative perception (%) =70.9%-4.7% =66.2%

* Employment scenario

Net Responses=positive perception (%)-negative perception (%) =59.5%-7.1% = 52.4%

* Price level
Net Responses=positive perception (%)-negative perception (%) =81.9%-2.4% =79.5%

* Rate of price level
Net Responses=positive perception (%)-negative perception (%) =82.4%-1.5% =80.9%

Present expectation index
100+ average (net response of selected factors)
=100+ average (70.1+41.3+44.4+66.2+52.4+79.5+80.9)
=100+ (434.8)/7
=100+62.11
=162.11

Future Expectation Index
Net responses measured against the selected parameters: * Economic conditions
Net Responses=positive perception (%)-negative perception (%) =75%-3.6% =71.4%

* Household circumstances

Net Responses=positive perception (%)-negative perception (%) =72.3%-4.8% =67.5% * Income

Net Responses=positive perception (%)-negative perception (%) =76.8%-4.9% =71.9%

* Spending

Net Responses=positive perception (%)-negative perception (%) =67.5%-7.2% =60.3%

* Employment scenario

Net Responses=positive perception (%)-negative perception (%) =75%-7.1% = 67.9%

* Price level
Net Responses=positive perception (%)-negative perception (%) =77.9%-3.9% =74%

* Rate of price level
Net Responses=positive perception (%)-negative perception (%) =78.1%-1.4% =76.7%

Future expectation index
100+ average (net response of selected factors)
=100+ average (71.4+67.5+71.9+60.3+67.9+74+76.7)
=100+ (489.7)/7
=100+69.95
=169.95

CHAPTER – 6
FINDINGS, CONCLUSION &
RECOMMENDATIONS

Findings

* Net response of current economic conditions as compared to one year ago has shown improvement ; also positive perceptions on future economic conditions has shown a turnaround and media has played a great role in forming such perceptions by buzzing the modi sarkaar as business friendly political party * About sixty percent of the respondents were of the view that their household circumstances would become better off as inflation being in control and they expect income from business to increase * Respondents were quiet confident of rise in their total income compared to a year ago and the noticeable factor behind it is not only improvement in current financial position but they also expect value of real estate to increase * The net response on current spending continued to remain at above 70 per cent. As regards future spending, nearly 78 per cent respondents expect an increase in 1-year ahead period. * Personal finance is an important factor in determining the spending pattern as it gives a comfortable level and increase in income may further increase the confidence of the consumer to spend and he could even then take credit to spend on the consumer durables.

* Respondent also viewed that this is the right time to make major outlay on real estates and were not confident to bet on gold/bullion * Views of the respondents on essential and non-essential spending of their household have been ascertained more than 80 per cent of the respondents reported increase in the current as well as future spending perceptions on essential items. However, the proportion of respondents who reported increase in current and future perceptions on non-essential spending is much lower at around 40 per cent. * Employment has improved compared to year ago the growth has taken place but factors such as employment take time to improve hence if 58.8% believe it has improved 40% do believe that it has remained the same or has got even worsen * 72.5% of the respondents said that change in overall rate of price one year from now will be more than the current year,10.8% of them said that it will remain same and 8.8% of them said that it will be lesser than the current year. Even when the inflation is in control with a growing economy they also expect prices to rise.

* An important insight was that the respondents believed that the per head expenses of the family members is much more then the fixed expenses and is one of the important factors in determining their spending patterns * Respondents expect a rise in prices of goods and services though oil prices have seen a decline but the respondents are smart to understand that this is short term and prices would shoot one year from now

CONCLUSION
Through this study it can be concluded that residents of Ludhiana feel that their present economic conditions have improved and expect to further improve in future .Positive responses were reported when measured against parameters such as income, employment, spending, economic conditions, price level, rate of price level and household conditions. Respondents showed expectation from the modi sarkaar and it is one of the important factor which has influenced perceptions of residents of Ludhiana so positively. They are in hopes that “business friendly sarkaar” would do good of the industrial hub. A overall positive economic outlook could be observed

RECOMMENDATIONS
Policymakers should try to create an environment in which consumer confidence is optimal. The right mix of fiscal and monetary policies to encourage investment and generate sustainable employment is critical.
These policies should be cognizant of the following: • The level of taxation – higher taxes reduces the amount of disposable income which in turn affects the level of spending. • Adequate regulation and supervision of the financial sector to ensure stability in the banking system. This has implications for the level of savings and investment. • The level of debt- unsustainable debt levels will influence future fiscal policy often leading to higher taxes and cuts in government expenditure. This is in turn will have a negative impact on economic growth.
• Inflation and interest rates- Inflation should be kept at a rate which does not significantly erode purchasing power while interest rates should not make the cost of borrowing too high which can dampen expenditure and investment.

BIBLIOGRPAHY

Ludvigson, S. C. (2004), “Consumer Confidence and Consumer Spending”, Journal of Economic Perspectives 18 (2).
Afshar, T., G. Arabian and R. Zomorrodian (2007), “Stock Return, Consumer Confidence, Purchasing Managers Index and Economic Fluctuations”, Journal of Business and Economics Research, vol. 5, No. 8, August
Jeff Dominitz & Charles F. Manski, 2004. "How Should We Measure Consumer Confidence?," Journal of Economic Perspectives, American Economic Association, vol. 18(2), pages 51-66, Spring.
Bram, Jason and Ludvigson, Sydney. “Does Consumer Confidence Forecast Household Expenditure? A Sentiment Index Horse Race.” Federal Reserve Bank of New York Economic Policy Review (June 1998), pp. 59–78.
Chang, H.H. and Chen, S.W. (2008). The Impact of Online Store Environment Cues on Purchase Intention. Online Information Review, Vol. 32, No. 6, pp. 818- 841.
Bram, Jason, and Sydney Ludvigson. 1997. “Does Consumer Confidence Forecast Household Expenditure? A Sentiment Index Horse Race.” Federal Reserve Bank of New York Research Paper no. 9708.
Juster, F. T. (1964). Anticipations and Survey. An Analysis of Consumer Behavior. Princeton, NJ: Princeton University Press. Juster, F. T., & Wachtel, P. (1972). Uncertainty, expectations and durable goods demand. In B. Strümpel, J.N. Morgan and E. Zahn (Eds.), Human Behaviour in Economic Affairs: Essays in Honour of George Katona, New York, NY: Elsevier Scientific Publishing, 321-345
Hymans, S. H., Ackley, G., & Juster, F. T. (1970). Consumer durable spending: explanation and prediction. Brookings Papers on Economic Activity, 1970(2), 173-206.
Mueller, E. (1966). The impact of unemployment on consumer confidence. Public Opinion Quarterly, 30(1), 19-32
Juster, F. T. (1964). Anticipations and Survey. An Analysis of Consumer Behavior. Princeton, NJ: Princeton University Press.
Carroll, C. D., Fuhrer, J. C., & Wilcox, D. W. (1994). Does consumer sentiment forecast household spending? If so, why?. The American Economic Review, 84(5), 1397-1408.
Desroches, B, Gosselin, M-A. (2002). The Usefulness of Consumer ConÖdence Indexes in the United States. Bank of Canada Working Paper No. 2002-22. Dominitz, J, Manski, CF. (2004). How Should We Measure Consumer ConÖdence? The Journal of Economic Perspectives 18: 51-66
Eppright, DR, Arguea, NM, Huth, WL. (1998). Aggregate consumer expectation indexes as indicators of future consumer expenditures. Journal of Economic Psychology 19: 215-235.
Eppright, DR, Arguea, NM, Huth, WL. (1998). Aggregate consumer expectation indexes as indicators of future consumer expenditures. Journal of Economic Psychology 19: 215-235

| | QUESTIONNAIREBlock I: Respondent’s Details | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Address | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | If occupation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | code is 3 or 6, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | please mention | | | | | City | | | | | | | | | | Pin Code | | | | | | | | | | | | | | | | | | | | the category | | | Telephone | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | code of the main | | | Number | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | earning member | | | Age | 22-30 | | | | | | 30-40 | | | 40-60 | | | 60 & above | | | | | | | of the family | | | | | | | | | | | | | | | | | | | | | | | | | | Gender | Male | | | | | | | | | Female | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Occupation | Employed | | Self Employed/ | | House wife | | Daily | Retired/Pens | | Unemployed | | | | | | | | [1] | | | | Business [2] | [3] | | | | worker[4] | ioners[5] | | | | | [6] | | | | | | If [3] or [6] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Annual Income | ` 1 lakh or less | | ` 1to less than 3 | | | `3to less than 5 | | | | ` 5 lakh or more | | | | | | | | | | | | | | | lakh | | | | | lakh | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Family Members | 1 or 2 | | | | | | 3 or 4 | | | | | | | | 5 and more | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Number of Earning members | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Educational Qualification | | 1. Up to primary | | 2. Below graduate | | 3. Graduate & above | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Bank Account Holder | | | | | | | | | | | | | | | | Yes/ No | | | | | | | | | | | | Credit card user | | | | | | | | | | | | | | | | | | Yes / No | | | | | | | | | | | Block II: Current Economic Conditions | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1. How do you think economic conditions have changed compared with one year ago? | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | a. Improved | | | | | | | | | b. Remained the same | | | | c. Worsen | | | | |

1A) With regard to Question 1, what makes you think so? (Choose up to two answers.)

| | a. | Media reports | | | | | | | | | | | | | | | | | b. | Economic indicators and statistics | | | | | | c. | Business performance of the company I work for, or of my own | company | | | | | d. | Income level for myself or other family members | | | | | | e. | Bustle of shopping streets and amusement quarters | | | | | | | | | | | | | 2. How do you foresee economic conditions one year from now? | | | | | | | | | | | | a. Will improve | b. Will remain the same | | c. Will worsen |

3. Considering the current economic conditions, what do you think about the current interest rate level? A) From borrower’s point of view B) From Depositor’s point of view

(a) Is low | | (b) Is appropriate | | (c) Is high | |

(a) Is low | | (b) Is appropriate | | (c) Is high | |

Block III: Household circumstances and the general views

A. Household Circumstances

4(i). What do you think about your household circumstances compared with one year ago?

a. Become somewhat better off | b. Difficult to say | c. Become somewhat worse off | | | |

4(ii) What do you expect your household circumstances one year from now?

1

a. Will be better off | b. Will remain the same | c. Will be worsen |

4A) Why do you think your household circumstances have/will become better /worse off? (Choose all applicable answers)

| | As compared to one year ago | One year from now | | | Increased | Decreased | Will Increase | Will Decrease | a. | Salary and business income | | | | | b. | Income from interest/dividend | | | | | c. | Special income from sales of real estate | | | | | d. | Prices | | | | | e. | The value of real estate and stocks | | | | | f. | The number of dependents in my family | | | | | g. | Others (Please Specify) | | | | |

B.Income

5. How has your income (or/and other family members' income) changed from one year ago?

a. Increased | b. Remained the same | c. Decreased |

6. What do you expect your income (or other family members' income) will be one year from now?

a. Increase | b. Remain the same | c. Decrease |

C: Spending

7. How have you (or other family members’) changed consumption spending compared with one year ago?

a. Increased | b. Remained the same | c. Decreased |

If you choose (a) or (c) in Question 7, please answer Question 8. For remaining respondents, please skip questions Q. 8 and go to Q.9.

8. Why have you increased /decreased your (or other family members’) spending? (Choose all applicable answers) | | Increased | Decreased | | | | | | | | a. | Because my income has | | | | | b. | Because my future income is likely to | | | | | c. | Because the value of non-financial assets such as real estate has | | | | | | | | | | | d. | Because the value of financial assets such as Stocks and Mutual Funds has | | | | | e. | Because income from bonds and Fixed Deposits has | | | | | f. | Because expenditure for real estate (purchase/maintenance) such as a house* | | | | | g. | Because expenditure towards consumer durable goods such as a | | | | | | vehicle/TV/fridge* | | | | | h. | Because my spending due to number of dependents in my family has | | | | | i. | Because the cost of consumer goods have | | | | | j. | Because the cost of services have | | | | | k. | Others (Please Specify ) | | | | |

9. Do you plan to increase or decrease your spending within the next twelve months?

a. Increase | b. Neither increase nor decrease | c. Decrease |

10. Is it a good time to make major outlay for the following items:

| | a. Yes | b. Can’t say | c. No | | | | | | 1. | Motor Vehicle | | | | 2. | House | | | | 3. | Durable goods (other than motor vehicle) | | | | 4. | Gold/ bullion | | | |
D: Employment Scanario

11(i). In consideration of the situation as compared to one year ago, what are your views on employement scanario?

Improved | Remained the same | Worsen | | | |

11(ii). In consideration of the situation one year from now, what are your views on employment scanario?

* Because of Phasing out past expenditure
2

Will improve | Will remain the same | Will worsen | | | |

Block IV: Perception of Price Level

12. How do you think the overall prices of goods and services have changed compared with one year ago?

a. Gone up | b. Remained almost Unchanged | c. Gone down |

If you choose (a) in Question 12, please answer Question 13. For remaining respondents, please skip question Q. 13 and go to Q.14

13. How do you think the overall rate of this price increase have changed compared with one year ago?

a. More than last year | | b. Same as last year | | c. Less than last year | 14. In which direction do you think prices will move one year from now? | | | | | | | | | | a. Will go up | | b. Will remain almost unchanged | | c. Will go down | |

If you choose (a) in Question 14, please answer Question 15. For remaining respondents, please skip this question.

15. How do you think the overall rate of this price increase will change one year from now?

a. More than current Year | b. Same as current year | c. Less than current year |

Name of the Investigator | Signature of the Investigator | Date of the interview | | | | | | |