All Will Be Well

“All is Well” with the economy, the Indian government tells us

“It Is Not”, the Indian public tells the Reserve Bank of India (RBI).

Every two months, the RBI surveys Indians for their perceptions of the Indian economy - inflation, employment, spending plans, and the “General Economic Situation”. For each of these markers, citizens are asked whether things are good, bad, or indifferent. For over a decade now, Indians have been saying that the economy is not in great shape.

The ‘Net Responses’ in this chart show the percentage of Indians who think the economy is doing well, minus those who think it is doing badly. After 2016, the Net Response has pretty much consistently been negative. The number took a deep dive during COVID, then climbed out of the trough, but barely poked its head above water, and that briefly, only to start dropping this year, presumably because the US and Israel began bombing Iran.

In the same set of surveys, the RBI also asks Indians how they believe the economy will perform a year down the line. You can see that data in the orange line, below, which I have superimposed on the same chart. The optimism is amazing. Year after year, Indians have believed that things will be better - much, much better - a year down the line.

It doesn’t matter that the track record is one of being disappointed, year after year.

You see the same pattern in our perception of the employment situation - below. For ten years now, Indians have believed that the job situation is either scarce or dire. But, a year later, they believe, things will be great. The optimism is full-blown, and on average, the Net Responses shift by a massive 40%.

I don’t understand the source of this optimism; perhaps it is a psychological quirk needed for survival. Nothing in our recent history suggests that employment numbers will tick up substantially. In fact, the most recent commentary around AI, and poor job creation in manufacturing suggests the opposite. But here you have it. Indians continue to be optimistic for June 2027.

All Is Not Well.

But It Will Be.