The U.S.-based Boston Analytics charts consumer confidence in India on a monthly basis, above. The information is aired in India each month on CNBC-TV 18. Photo courtesy of Business Wire

BOSTON – Home to more than 1 billion people and sporting the second-fastest growing economy in the world, consumer spending is big business in India. But tracking and predicting consumer-spending habits in a nation as expansive and diverse as India has proven to be a colossal challenge, so much so that until recently, no private company offered consistent month-to-month tracking of consumer confidence levels there.

Frustrated by the lack of consumer confidence data available from one of the world's largest economies, a Massachusetts company last year decided to take up the task itself.

Boston Analytics, a Boston-based market research and analysis firm, began tracking consumer confidence levels in 15 Indian cities in January 2008. But in India, home to a myriad of different cultures and languages where vast disparities in wealth often make for disparate consumer habits, the work has proven a significant undertaking, according to Kimberlee Luce, vice president of business research and analysis for the firm.

"Before we jumped into this, we found there wasn't a single accurate, consistent yardstick of consumer confidence levels in India," said Luce. "From our standpoint, the dearth of data was extremely inhibiting."

Staffed with more than 100 employees, most of whom are based on the Indian subcontinent, Boston Analytics conducts face-to-face interviews with over 10,000 Indian consumers every month. Interviewers ask questions ranging from a consumer's confidence in the overall health of the market to their intentions to buy a new two-wheeled vehicle in the next month.

India is a county that relies heavily on retail business to fuel its economic growth. Consumer spending makes up about 60 percent of India's gross domestic product, a significantly higher share than in some nations like China, where private consumption makes up only about 35 percent of the national GDP. "From India's perspective, it's a good idea to keep a close eye on the consumer," said Luce. "Consumer spending choices have a tremendous effect on the direction of the economy."

But the company's monthly consumer confidence score is not always warmly greeted by investors. In fact, since the company started tracking the score 18 months ago, it has fallen precipitously and almost without interruption, dropping from its starting point of 100 in January 2008 to 71 this June.

"Sometimes, the news is not what everybody wants to hear," said Luce. "The most important aspect however, is that [the score] represents an accurate reflection and predictor of consumer behaviors."

The survey includes questions concerning certain macro- and micro-economic indicators, including the respondent's employment and income levels and their intentions to buy certain durable goods. The company also conducts in-depth interviews with subjects on a very particular segment of the retail economy every month, providing a unique glimpse into even the most specialized retail fields of the Indian economy.

For example, last month the company gauged consumer habits regarding "store-bought non-alcoholic beverages." The survey found that three-quarters of Indian consumers report consuming such beverages less than once each day, providing what Boston Analytics called "a large untapped market, particularly in the carbonated drinks and juice-based markets." The survey found that beverage distributors would first have to navigate two significant consumer gripes regarding such beverages among consumers in India – health-care concerns and taste.

The consumer confidence final number is aired in India every month on CNBC-TV 18, a satellite business news channel, just before critical buy-ins in the market, thanks to a partnership between the network and Boston Analytics. The India consumer confidence index is co-branded between Boston Analytics and the news channel. Private companies and market analysts pay the company for access to the complete survey and analysis of its results.

The survey collection process takes about two weeks, and the data is computed and calibrated over the next two weeks before the monthly report is released. The 15 cities targeted for the survey range from relatively affluent to predominantly working-class or low-income, though Luce said the company is primarily interested in consumers who possess significant purchasing power. And though the company did not begin releasing the data until January 2008, Boston Analytics spent an entire year laying the groundwork for the massive undertaking, Luce said.

The company is methodical in its efforts to ensure the survey data is accurate and reliable, Luce said. While Boston Analytics outsources its survey-collecting functions, the company contacts 10 percent of the survey sample every month to make sure the data is accurate, Luce said.

Before Boston Analytics took up the work, no company offered consistent and reliable consumer confidence measures in India, Luce said. Instead companies and analysts relied on figures released every six months, which Luce said is too infrequent to be useful, or levels based only on online surveys, which Luce said is hardly representative of India as a whole, where Internet access is still largely inaccessible in many areas.

A native of the Midwest, Luce lived for two years in India and Nepal tracking economic development in those countries before joining Boston Analytics. "I'm right at home here," she said.