Economic activity has recovered sharply from the pandemic lows - GDP growth which had fallen 25% in the June quarter grew modestly in the December quarter. However despite this sharp recovery, urban consumers are still struggling as per RBI's Consumer Confidence survey.
On a net basis, half of urban households are reporting a decline in their income (and only a modest increase from the Pandemic lows) and an even higher proportion are reporting worsening in the job market.
The picture remains gloomy on the expenditure front too. Almost half the households on a net basis have reported to have cut back on their non-discretionary expenditure. Even on the non-discretionary consumption, far fewer households than normal have seen an increase.
With the caveat that household sentiment tends to be fickle and generally a lagging indicator, this disconnect between household perception of the economy and the reality as apparent in data is a bit difficult to reconcile.