The MasterIndex of Consumer Confidence score in India has grown from 58 in the second half of 2004 to 72 in the first half of 2005. A year ago, it was 63.5.
The rise in consumer confidence has been attributed to consumer being more positive on three out of the five factors -- quality of life (74.9), regular income (80.8) and stock market (80.1). The other two factors are employment and economy.
Indian consumers are slightly optimistic about employment (54.6) and fairly optimistic on the economy (69.7). They have fairly high expectations of regular income as well as of the stock market.
Conducted biannually in February and August, the MasterCard International Survey analyses consumer perception on economic conditions over the next six months in seven countries -- Egypt, Kuwait, Lebanon, Saudi Arabia, UAE, South Africa and India.
It conducted a survey of 400 respondents (individuals aged of 18-64) in Mumbai and New Delhi. The MasterIndex has a range of 0 to 100 with 50 as the mid-point.
"There is disconnect between the economic growth rate and employment in India," said Tom Joehnk, editor/ economist, Asia and Australasia, Economist Intelligence Unit.
The economic upturn has failed to create employment opportunities as the labour market in the country is very rigid, he said.
"Indian economy looks positive with stable inflation outlook, strong currency, reasonable economic growth, flat energy prices and integration into the global economy," said Joehnk.
However, the country's growth rate is likely to slow down in the next two years as the percentage of investment to gross domestic product, which is at 26 per cent, is insufficient to support a growth rate of 7-8 per cent, he added.
The high debt-to-GDP ratio is also a concern and will limit private investment in the country. It will also limit upgradation of resources, said Joehnk.
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