Economy hits new low: For 1st time in 40 years, consumer spending falls to 3.7%

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).

The leaked National Statistical Office (NSO) survey, titled ‘Key Indicators: Household Consumer Expenditure in India’, allegedly shows that the average amount of money spent by an Indian in a month fell by 3.7% to Rs 1,446 in 2017-18 from Rs 1,501 in 2011-12. 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 the report, 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 report, post the survey by NSO, was supposed to be released in June 2019, but has reportedly been held back because of its adverse findings, Business Standard stated, quoting four people familiar with the development.

It is a point to be noted that the period in which the survey was conducted was during the implementation of goods and services tax (GST) and was preceded by the Modi government's demonetisation move in November 2016.

Speaking to Business Standard, Himanshu, associate professor at Jawaharlal Nehru University's Centre for Economic Studies and Planning said that since 1972-73, when there was a global oil crisis, real consumption expenditure had never shown a decline.

Business Standard further reported that the NSO's consumer expenditure survey was approved by a working group five months ago. The government had also formed a sub-committee to look into the data shown by the survey report after concerns were raised, but no defect was found.