Why are Indians 'feeling' the financial pinch under Modi?

Nielsen reported last month that India's consumer confidence is now at a one-year low. The RBI consumer confidence index suggests that the current situations index has entered the pessimism zone. The future expectations index too has also been deteriorating over the last 6 months. Remember, both of these are Metro/Urban surveys, given the rural situation (area sown is lower than last year same time though above average), one can only imagine that things are far worse than the two indices. Things are not going great for Indians!

I will use two simple data sources (Beyond the usual GDP, Employment, Income growth stories) to illustrate why Indians are feeling the way they are at the moment. These are hypotheses only and so quite debatable.

How have our financial assets grown over the last 3 years versus the 3 years prior to 2014?

*Insurance AUM is Q4 2016-17 vs Q4 2013-14 and not Q1 2017-18 vs Q1 2014-15

Except for deposits (all), the other asset classes have grown at a faster pace under Mr Modi than Mr Manmohan Singh. Mutual Funds is not a surprise at all, they received the highest ever inflows in 2016-17. Slowdown in Growth in Deposits is a bit strange given that large amounts of cash deposits that Indians made in November and December 2016. One would imagine that growth would have been even lower if those cash deposits were not made.

So what is the Status overall growth of a combination of the above 3 asset classes?

During the 3 bad years prior to Mr. Modi caming to power, our financial assets grew 47.6%, Under Mr. Modi it has grown 37.2%. While our Mutual Funds and Insurance AUM have grown at a faster pace, bulk of our assets are in bank deposits and hence the overall slower growth. Also, the base effect, MMS was dealing with a much smaller base than Mr. Modi but then the expectation (as per election rhetoric) was we will see achche din.

The Property Problem

With financial assets not growing faster, what happened to our other favourite asset class? Property!

Between June 2011 and June 2014, our borrowing on property went up 57%, while it went up 53% between June 2014 and June 2017 indicating lower enthusiasm for the asset class.

The NHB recently restructured its statistics so one can say pricing data is not reliable before 2012-13. This is what we know from the data available

Mumbai: Property Prices went up 15% between 2012-13 and 2013-14, 7.2% per year on an average from 2014 to 2017

Delhi: Property Prices went up 8% between 2012-13 and 2013-14, -1% per year on an average from 2014 to 2017

Bangalore: Property Prices went up 9% between 2012-13 and 2013-14, 7.9% per year on an average from 2014 to 2017

What about Gold?

Gold prices have gone up about 6% between 2011 and 2014 and some 4% between 2014 and today. So nothing great happening their either

So, if you look at the five major asset classes that Indians invest their money into, the performance of our assets under Mr. Modi is worse than it was under Mr. Mannohan Singh. It feels like things are getting worse

So we now know why we feel the way we do. Now for some action!

Sources: Deposit data - RBI, Mutual Fund data - AMFI, Insurance Data - IRDA