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Topic Analysis of Consumption Pattern of India -Household Sectors Subject -Macro Economics

Topic Analysis of Consumption Pattern of India -Household Sectors Subject -Macro Economics
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    Topic Analysis of Consumption Pattern of India - Household Sectors Subject -Macro Economics Submitted to: Mandeep Bhardwaj Submitted by : Amanjot Kaur Reg. No. 11914359  Introduction Consumption is an important activity performed by the household sector is primarily of two types i.e. lifeline and lifestyle. Lifeline may further be divided into food and non-food items like medical, education, clothing etc. Life style may include entertainment processed foods and white goods etc. Consumption is based on all those economic activities which are revolving in society. Consumption pattern of country shows the clear-cut picture of its standard of living, level of poverty and economic progress. The performance of any economy is measured in terms of the trends and pattern of macroeconomic variable which include national income, consumption, saving, investment and employment. Per capita income and food consumption both are the indicators of human development but food consumption is a better indicator of human welfare. Traditional development theory states that economic development leads to accumulation of capital. This accumulation happens through generation, realization and reinvestment of surplus created; by using fixed capital, with labour, which is transferred from the labour-surplus "traditional" sector. Capital formation generates employment which gives a boost to production. However, this path of development can be sustained only if adequate supply of food to the modern sector is guaranteed. This results in increase in food consumption. Such a process is supposed to transform the traditional sector into a modern one and thereby ensuring self-sustained growth of the less developed economy. Keynesian psychological law of consumption states that increased income is distributed between consumption and saving. Whatever is not consumed is saved. The psychology of the community is such that when aggregate real income is increased aggregate consumption is also increased, but not in the same proportion of increase in income. Propensity to consume is not the mere desire to consume, but actually the consumption that takes place or is expected to take place, out of varying amounts in the change in disposable income. This study is based on analysis of consumption pattern of India w.r.t. Household sector. The primary economic role of household sector is consumption. The Annual consumption growth in India raised at 9.7% while Urban consumption grew 8.6%. Rural Indian households are now spending more on consumer goods like durables, health, education and personal care and food and beverage than that of few years ago. Objectives 1.   To analysis the consumption pattern of India w.r.t. Household Sector. 2.   To examine the share of each sector in household consumption.  Data Analysis and Interpretation   This study is based on analysis the consumption pattern in india with respect to household consumption by dividing the consumption into different segments . The data has taken from world bank of India which is shown in form of diagram and one in form of Table .This study include different factor for consumption: 1.   Household consumption in India w.r.t rupee 2.   The level and growth of per capita income and consumption 3.   Consumption as percent of GDP in India 4.   Consumption growth in India 5.   India- share of each sector in household consumption w.r.t. Consumption segment (Based on Income) Household consumption in India w.r.t rupee   Household consumption is the main component of the GDP, constituting about 60 percent of GDP. It is more stable over time compared to investment purchases by firms as households try to smooth their consumption over time and make it less dependent on income fluctuations. Its contribution to the business cycle is therefore less prominent than the contribution of investment. Nonetheless, being such a major part of the economy, even relatively small fluctuations in household consumption have important implications for the overall economy.   The average value for India during that period was 13929.48 billion Indian Rupee with a minimum of 4289.49 billion Indian Rupee in Q2 2004 and a maximum of 29746.54 billion Indian Rupee in Q1 2019.   Level and Growth of per capita income and consumption The elasticity of consumption has remained very high, its composition has changed in the past few years. From food & beverages, transport & communication, which are more of necessities, the spending has been shifting towards clothing & footwear, health & education, housing & maintenance etc. This shows an increase in discretionary spending by the households as compared to the necessities. This shift is also visible in the change in pattern of spending from consumption of goods to services. There has been a decline in share of goods in total final consumption, which has correspondingly increased the. share of services by more than 1 percentage point.   Consumption as percent of GDP in India     This is data for India from Q2 2004 to Q2 2019. The average value for India during the year of Q2 2004 was 57.36 percent with a minimum of 51.69 percent in Q1 2011 and a maximum of 61.18 percent in Q4 2018.  Consumption growth in India     This is data for India from Q2 2005 to Q2 2019. The average value for India during that period was 13.71 percent with a minimum of 0.72 percent in Q1 2017 and a maximum of 24.21 percent in Q4 2017. India- share of each sector in household consumption, -Consumption segment (Based on   Income) The below data is based on national household surveys, which include information for group of households of the entire country. The resulting datasets has been used to calculate the share of population at different level of consumption. Four level of consumption are used to segment the market: Lowest, Low, Middle, and Higher. They are based on global income distribution data, which rank the global population by income per capita. The lowest consumption segment corresponds to bottom of the global distribution, and the 50 th  percentiles and below: the low consumption segment to the 51th -75 th  percentiles; the middle consumption segment to the 76 th  -90 th  percentiles; and the higher consumption segment to the 91th percentile and above.
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