Consumption expenditure falls for first time in over four decades: NSO

Consumption expenditure

According to the latest consumption expenditure survey by the National Statistical Office (NSO), consumer spending has fallen for the first time in more than four decades in 2017-18, majorly due to decelerated rural demand, Business Standard reported on Friday.

They key indicator in the survey is Household Consumption Expenditure. The survey shows that the average amount of money spent by a person in a month fell by 3.7 per cent from Rs 1,501 in 2011-12 to Rs 1,446 in 2017-18.

The survey was conducted by the NSO between July 2017 and June 2018 and the report was supposed to be released in June 2019 but, as reported by Business Standard, it was withheld by NSO due to its “adverse” findings.

It is to be noted here that the survey was conducted at a time when the GST was implemented and only a few months after demonetisation was announced.

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Last time when a fall in consumption was seen was in 1972-73 due to a global oil crisis and before that, in the mid 1960s due to a domestic food crisis.

“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.

A worrying thing observed in the report is the decline in food consumption. It has happened after decades and suggests that malnutrition has increased, especially in rural areas. Why rural areas? Because there has been a fall of 10 percent in consumption expenditure of rural people. It has dropped from Rs 643 on a monthly basis on food in 2011-12 to Rs 580 in 2017-18.

“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,” Business Standard quoted former Planning Commission Member Abhijit Sen as saying.

Credit: Business Standard

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