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  • Consumption and GDP Vs Time

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    Ankur Kedia
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    Household consumption as a percentage of GDP in India has decreased from 80% in 1965 to 60% in 2014, largely due to increased government and private investments over this period. While consumer spending still accounts for 60% of GDP and drives economic growth, the rate of growth in household consumption moderated to 4% in 2012-2013 after posting 7.9% growth in 2011-2012, as higher interest rates imposed to combat inflation reduced purchasing power.

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    Household consumption as a percentage of GDP in India has decreased from 80% in 1965 to 60% in 2014, largely due to increased government and private investments over this period. While consumer spending still accounts for 60% of GDP and drives economic growth, the rate of growth in household consumption moderated to 4% in 2012-2013 after posting 7.9% growth in 2011-2012, as higher interest rates imposed to combat inflation reduced purchasing power.

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    18 views1 page

    Consumption and GDP Vs Time

    Uploaded by

    Ankur Kedia
    Household consumption as a percentage of GDP in India has decreased from 80% in 1965 to 60% in 2014, largely due to increased government and private investments over this period. While consumer spending still accounts for 60% of GDP and drives economic growth, the rate of growth in household consumption moderated to 4% in 2012-2013 after posting 7.9% growth in 2011-2012, as higher interest rates imposed to combat inflation reduced purchasing power.

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    © All Rights Reserved
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    of 1

    Consumption and GDP vs Time

    70000
    60000
    50000
    40000
    Consumption (C30000
    )
    20000

    GDP/Consumption (in INR billion)

    GDP (Y)
    (at Constant price)

    10000
    0

    Years

    Household consumption as a part of GDP has gone down from being


    about 80 % in 1965 to about 60 % in 2014. This is mostly because of
    increased government and private investments. Still Consumer spending
    being 60 % of GDP is the engine for growth of GDP. However after
    posting a growth of 7.9 % in 2011-12, it posted a moderate growth of 4 %
    in 2012-13
    Even in the financial crisis of 2008-09, growth in consumer spending
    sustained its momentum because of low interest rates in country,
    implementation of 6th Pay Commission and rising rural income.
    However to fight inflation which was touching double digit figure, there
    has been increase in interest rate by RBI. This reduced the purchasing
    power of the households resulting in moderation of household spending .

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