New consumption survey reveals the cracks in the economy

The Indian economy has grown steadily, but the lack of momentum in consumption and the impact of high food inflation have not gone unnoticed. The fact sheet of the latest Household Consumption Expenditure Survey, conducted between August 2023 and July 2024, confirms the lacklustre growth in consumption spending and a marginal shift from non-food items to food items due to high prices. As a result, the share of non-food items in overall spending declined from 53.6% to 53% in rural areas and from 60.8% to 60.3% in urban areas. Welfare woes Several economists and corporate heads, especially those from the consumer goods segment, had highlighted the slowdown in rural consumption in the previous fiscal year and indicated that the slowdown may be visible for even the better-earning population this fiscal as the rising cost of food and education takes a toll on non-discretionary spending. There have been calls for a fiscal boost to consumers to revive consumption, but the major welfare schemes announced by central and state governments have had limited impact on urban consumption spending, an analysis of the new data shows.