Demonetization effect: Indiaâ€™s Buying Propensity Index Falls Precipitously
“The demonetization of high-powered currency notes has led to Indiaâ€™s Buying Propensity Index (BPI) in December 2016 fall to 0.26, (measured on a scale between +1 to -1), down 0.42 BPI points from November (0.68). â€œThe countryâ€™s buying sentiment was consistently recovering since July 2016, but Prime Minister Narendra Modiâ€™s surprise demonetization announcement was the biggest factor causing unnatural fluctuations in the buying sentiment of the country as reflected by the Index. The November 2016 BPI had shown a rise of 19% stemming from the initial euphoria of long term positive connotations of the announcement,â€ said N. Chandramouli, CEO, TRA Research, elaborating on the BPI said.
Mr. Chandramouli further said the December fall was when the pain of demonetization began to be felt more severely after the first salary cycle post-demonetization announcement in December, and the impact of the enduring business and personal hardships was felt by citizens. The buying sentiment in December seems to have fallen precipitously to the lowest in 9 months. The Buying Propensity Index is a result of a primary research across 3,000 consumer-influencers across the 8 Tierâ€“I cities in India conducted every quarter.Considering the eight cities studies for the BPI, Delhi was most severely impacted with a month-on-month fall of 122% in citizensâ€™ keenness-to-buy, registering a negative sentiment in December at -0.14. This was followed by Kolkata with a BPI fall of 90%. The three cities which showed a medium fall in BPI were Mumbai (-58%), Pune (-46%) and Chennai (-35%). The cities which had a lower negative impact of demonetization on BPI were Bangalore (-16%) and Hyderabad (-15%). Ahmedabad was totally contrary to the BPI of the other cities, falling from a high 0.63 in October to 0.46 in November. (The writer is a Delhi-based freelance journalist)”