Tuesday, Nov 29, 2022

First Time In Four Decades, Consumer Spending In India Falls By 3.7%: Report

Worrying trend: there is a fall in the food consumption for the first time in decades, pointing towards malnutrition in the country.

A representational image of a vegetable seller PTI File Photo

The consumer spending in 2017-18 decreased by 3.7 per cent, for the first time in four decades, according to the latest consumption expenditure survey by the National Statistical Office (NSO).

According to the NSO expenditure survey, that was accessed and reviewed by Business Standard, the dip in consumption expenditure indicates the increasing number of people hit by poverty.

According to a report in Business Standard, the NSO survey underlines the fact that there is a shortage of demand in the market, more so in the rural market.

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"The average amount of money spent by a person in a month fell from Rs 1,501 in 2011-12 to Rs 1,446 in 2017-18," the report said.

"The figures for monthly per capita consumption expenditure (MPCE) are in real terms, meaning these have been adjusted for inflation, keeping 2009-10 as the base year. In 2011-12, the real MPCE had risen 13 per cent over a period of two years," the report added.

The unreleased NSO survey also highlights the decline in consumer spending in villages which has decreased by 8.8 per cent in 2017-18.

The cities, however, saw consumer spending rise by 2 per cent over six years.

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“In the last five decades at least, there has never been a period that consumption expenditure in real terms has declined. This data clearly shows that poverty levels would have gone up substantially. A back of the envelope calculation would suggest that the percentage of population in poverty would have gone up by at least 10 percentage points,” Business Standard quoted Himanshu, associate professor at Jawaharlal Nehru University's Centre for Economic Studies and Planning, as saying.

The last time NSO showed a steep decline in consumption expenditure was in 1972-73. The fall in consumption then was attributed to a global oil crisis. In 1960s, crisis in domestic food had led to the fall in consumption expenditure.

The NSO report that was to be released in June this year has been withheld due to 'adverse findings', the report said. The survey was conducted between July 2017 and June 2018, coinciding with the time when the PM Modi-led government implemented Goods and Services Tax (GST).

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There is a worrying trend that experts observed in the NSO survey: there is a fall in the food consumption for the first time in decades, pointing towards malnutrition in the country.

"The survey found that rural people spent Rs 580 on a monthly basis on food in 2017-18 on average, almost a 10 per cent fall from Rs 643 in 2011-12 (both in real terms). The corresponding figure for urban people was Rs 946 in 2017-18, compared to Rs 943 in 2011-12, which reflects muted growth," according to the Business Standard report.

With the increasing prevalence of poverty in the country, people in villages have slashed their spending on food items, except products related to milk. The trend is not different in cities where people have cut their expenditure on essential cooking items such as edible oil, sugar, spices and even salt.

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“It’s a real concern from the point of view of welfare of the people. A fall in food spending, especially in villages, shows that malnutrition has increased. It would be fair to say that poverty must have increased significantly,” the BS report quoted former Planning Commission Member Abhijit Sen as saying.

Due to a time lag of six years between two data sets produced by the NSO (2011-12 and 2017-18), Sen said it is unclear when a dip in consumption expenditure might have begun.

India's economic growth has decelerated since mid-2018, with real GDP growth slipping from nearly 8 per cent to 5 per cent in the second quarter of 2019 and joblessness rising.

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According to NSO data, the unemployment rate stood at a 45-year high of 6.1 per cent in In 2017-18, compared to 2.2 per cent in 2011-12. The periodic labour force survey was was also withheld for release by the government for five months after being approved by the National Statistical Commission (NSC).