Mumbai: India’s consumer confidence sank to a new low in February, signalling increasing concern of individual households over the state of their own finances and the state of the economy in general, according to an index based on a survey of nearly 10,000 respondents.

The index compiled by CNBC-TV18 and Boston Analytics for February stood at 77.6, a fall of 3% from January 2009’s reading of 80.0. The index value for the month of February is the lowest since the inception of the index in January 2008.

Also See Consumer Confidence (Graphic)

The index consists of two sub-indices—the current situations index and the future expectations index. Both these indices too dipped lower in February from the previous month. While the current situations index dropped 5.5% to 75.7, the future sentiments index dipped 2.9% to 77.8.

“The urban consumer in India continues to express significant concern about the future of the Indian economy,” said Sam Thomas, Boston Analytics’ director of research and development, in a statement on Tuesday.

“What is particularly disheartening in the February reading of consumer confidence is the fact that there is a drop in confidence in both current and future expectations of economic conditions.”

Declining confidence in consumer spending, household income, job security, and economic conditions drove the index lower. Because consumer sentiment tends to be a leading indicator, actual consumer spending is likely to match these depressed confidence readings, said Thomas.

“Thus, India’s slowdown may be deeper than expected currently by most economy watchers. Needless to say, the declining trend first observed 12 months ago in March 2008 continues to ring alarm bells,” he added.

India’s economic growth is forecast by the government so slow to 7.1% this fiscal year, the least in six years. The stock market is slumping and so is the rupee while manufacturing output and exports are shrinking. Companies have put investment and hiring plans on hold and consumers cut spending.

The CNBC-TV18/Boston Analytics index, designed to measure consumer confidence in India on a monthly basis, is derived from a monthly survey targeting nearly 10,000 respondents across 15 Indian cities. The index is computed from responses to 25 questions covering variables pertaining to general economic conditions, employment, inflation, interest rates, real estate, household financial conditions, household income, spending plans, and savings.

Graphics by Paras Jain / Mint