Economic Slowdown in India, Consumption Expenditure (Download PDF)

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In the union budget 2019, it was announced that Indian economy aims to become $ 5 trillion economy by 2024. The economic slowdown in the India will impact this goal of achieving $ 5 trillion economy. To achieve this target India՚s GDP should have 12.4 % but in the first quarter of this financial year was 8 % only. The main reasons this decline in GDP are slowdown in investment rates, credit creation and domestic consumption.

Growth Slows Economic Slowdown in India
  • Economic slowdown has led to decline in the GDP.
  • Declining in GDP attributed to supply factors and demand factors.
  • Supply factors include decline investment in economy and demand factors include decline in consumption expenditure.
  • Supply side and demand side factors both are interrelated and interdependent in economy.
  • But Indian government focusing only on the supply side factors and not focusing on the demand side factors it leading to decline in the consumption expenditure.

The union budget 2019 not focused on the investment in various sectors to boost the Indian economy.

Buying Less Growth in Private Final Consumption Expenditure
Consumption Slowdown Hits Hard

Consumption Expenditure Analysis

  • It accounts for 60 % of the India՚s GDP.
  • Decline in consumption expenditure impacts the Indian GDP.
  • Various sectors of Indian economy from automobiles to biscuits are declining due to consumption expenditure.
  • It also leading to decline in some of the household goods like sops, packed tea etc.
  • It directly impacts the decline in expenditures of the poor and middle class.

Reasons for Decline in Consumption Expenditure

  • Agricultural sector in India facing agrarian distress, it affects the poor and marginal farmers and intended to leading decline in goods and services in rural areas.
  • Government policies like a GST and demonetization impacted the informal sector, informal sector employ more workforce than formal. It leads to low job creation and low income of people.
  • Inclusive growth and increasing unemployment in India reduces the income of the people.
  • Income inequality between the poor, marginal section and upper class section of the society.
  • The Economic growth in India is jobless growth.
  • The challenges with the Indian growth model are lack of inclusive growth, poor human capital formation, economic slowdown, jobless growth and environmentally understandable.

- Published/Last Modified on: December 20, 2019

Policy/Governance, Economy, Agriculture/Agro Industries, Govt. Schemes/Projects

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