Consumer spending at 4-decade low; India risks rising poverty, malnutrition

Average Indian spent Rs 56 per month lesser in 2017-18 compared to 2011-12: Survey

Poverty AP Representational image | AP

Consumer spending in India has fell for the first time in more than four decades in 2017-18, worsening concerns regarding the current economic slowdown. The expenditure survey conducted between July, 2017 and June, 2018 by the National Statistical Office revealed that people in rural areas spent lesser on essential food items such as salt, sugar, spices and edible oil, leading to a sharp 8.8 per cent fall in consumer spending in villages. 

The survey—Key Indicators: Household Consumer Expenditure in India—shows the average amount of money spent by a person per month fell by 3.7 per cent to Rs 1,446 in 2017-18 from Rs 1,501 in 2011-12, reported the Business Standard. While an individual in the rural spent Rs 1,217 in 2011-12, the same person could afford to spent only Rs 1,110 in 2017-18. At the same time, the monthly per capita consumption expenditure for an indivual in the urban areas during the same period rose a tad from Rs 2,212 to Rs 2,256. 

Overall, an average Indian spent Rs 56 per month lesser in 2017-18 compared to 2011-12, the survey, which has been reportedly withheld by the NSO due to its "adverse" findings, revealed. The report was supposed to be released in June 2019. 

Further, the rural areas witnessed a drastic fall in food consumption by 9.8 per cent. In urban centres, growth in food consumption has remained muted at 0.2 per cent. The study corroborates a shortage of demand in the economy, driven by the rural market.

The data points reveal that there is an alarming rise in poverty and malnutritution, especially in rural India. On an average, rural population cut their spending on food items from Rs 643 per month in 2011-12 to Rs 580 in 2017-18. Urban Indians spent Rs 946 per month in 2017-18, compared to Rs 943 in 2011-12—an increase by Rs 3. Furthermore, the spending on non-food items, too, declined sharply by 7.6 per cent over the same period in rural areas, while in urban centres, the figure rose by 3.8 per cent. 

It is to be noted that the survey was conducted a few month after demonetisation. The survey period also coincided with the Goods and Services Tax, which was implemented on July 1, 2017. 

The Business Standard report also noted that the last time consumption fell in India was during the global oil crisis of 1972-73. The report comes even as the Central government is battling a six-year low GDP growth rate at 5 per cent. The retail price based consumer inflation spiked to 16-month high of 4.62 per cent in October on costlier food items.