Consumer spend dips first time in 40 years: Report

Consumer spending fell for the first time in nearly four decades in 2017-18 due to slack rural demand, according to a Business Standard report quoting the latest consumption expenditure survey by the National Statistical Office (NSO).

Experts believe that the dip in consumption expenditure indicate an increasing prevalence of poverty in the country. The data further confirmes a shortage of demand in the economy, driven by the rural market.

According to the survey, the average amount of money spent by a person in a month fell by 3.7 per cent to Rs 1,446 in 2017-18 from Rs 1,501 in 2011-12. The monthly per capita consumption expenditure (MPCE) have been adjusted for inflation, keeping 2009-10 as the base year. In 2011-12, the MPCE had risen 13 per cent over a period of two years.

The survey was conducted by the NSO between July 2017 and June 2018, the period during which goods and services tax (GST) was implemented and a few months after the government’s demonetisation move.

In 2017-18, consumer spending in villages declined by 8.8 per cent. In cities, however, it rose by two per cent over the six years. This means that rural people on an average spent Rs 580 in a month on food in 2017-18, almost a 10 per cent fall from Rs 643 in 2011-12 (both in real terms), while urban people spent Rs 946 each in 2017-18, compared to Rs 943 in 2011-12, reflecting muted growth.

"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,” former Planning Commission Member Abhijit Sen said.