Private consumption is the spending of households and individuals on consumption of goods and services.Private consumption in India during FY22-23 rebounded in India due to two reasons-1)one is due to the "pent-up" demand after the pandemic years of suppressed private consumption ;2) The increase in private consumption during FY22-23 signals that households have more disposable income in their hand which in turn drives economic growth.
Private consumption expenditure which comprises 61 per cent of the GDP estimates, grew by 7.5 per cent during FY22-23, higher than the pre-pandemic five-year average of 6.9 per cent.But the worrying point is that the private consumption growth was weak at 2.8% (YOY)in Q4 of FY22-23.
Since private consumption accounts for approx 58-61% of GDP, Govt's policies must support them by enabling the households to have more disposable income in their hands.For that to happen, GOI will have to work on two pronged strategy 1)look at avenues for incomes to increase but this may not yield results quickly;2) look at reducing expenses for the households which can provide quick boost to the disposable income in their hands.
Inorder to enabling reduction of household expenses GOI must look at low hanging fruits and that is reduction of GDP i.e Gas(domestic subsidised LPG), Diesel and Petrol !!
This immediate reduction can provide significant momemtum to the increase in Private consumption and also bring down Inflation levels quickly as Fuels have higher rubbing off effect on all areas of the cost to the economy.It can assuage inflation expectations across all sectors of the economy and can push the private consumption levels.
More than this, this reduction of GDP prices will bring in "Acche-din" feel-good factor back to the households
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