The objective is to measure perceptions and expectations accurately so that the businesses can understands consumer moods and anticipate changes. They are measured on the lines of the work done in this regard by the Survey Research Center at the University of Michigan. This effort, called the Survey of Consumers, began in 1946 and has produced several measures that are well established lead indicators in the US. The Index of Consumer Expectations, produced by the Survey of Consumers, is included in the Leading Indicator Composite Index published by the US Department of Commerce. Like the Survey of Consumers conducted by the University of Michigan in the US, Indian respondents were asked five questions. The information collected is used to generate three indices viz.

  • Index of Consumer Sentiment (ICS)
  • Index of Current Economic Conditions (ICC)
  • Index of Consumer Expectations (ICE)

The five questions and their choice of answers given are:

  • Question 1: Compared to a year ago, how is your family faring financially these days?
  • Answer 1: a) Better b) Same c) Worse
  • Question 2: Do you think that a year from now your family would be faring financially?
  • Answer 2: a) Better b) Same c) Worse
  • Question 3: How would you describe the next 12 months' financial and business conditions in our country?
  • Answer 3: a) Good times b) Uncertain times c) Bad times
  • Question 4: What do you think would the next 5 years' financial and business conditions in our country be?
  • Answer 4: a) Continuously good times b) Uncertain with ups and down c) Continuously bad times
  • Question 5: Do you think that this is generally a good or bad time to buy things like furniture, refrigerator, television, two-wheeler, car?
  • Answer 5: a) Good time b) Same as other times c) Bad time