Another aftermath of demonetization and GST: declined in consumer spending. Howdy Modi!


Even a small wrong decision taken by the prime minister of a country leaves a great impact on its people’s lives. This is what is happening in India.

Prime Minister Narender Modi introduced Demonetization and GST in 2016 and it’s the end of 2019 and people of India are still having their worst time. A few months back, a survey on unemployment showed it to be at its peak in the last 45 years and now it’s the turn of consumer spending.

And Modi government is playing the same game of not releasing the data as it played when the survey for unemployment was out.

The report was to be released in June 2019 but was kept on hold due to negative results, according to the yearly report of the Ministry of Statistics and Programme Implementation (MOSPI).

 There is a decrease in monthly spending of Indians first time in four decades; Business Standard has reported citing a government survey that has yet not been released.

The average amount spent by Indians was Rs 1,501in 2011-12 which declined to Rs 1,446 by 2017-18.

The consumer spending in villages saw a decline of 8.8 % in 2017-18 which is a serious matter of malnutrition in India. On the other hand, the fall in consumer spending for urban areas was stable at 2 percent from the last 6 years.

This survey was carried out at the time of demonetization and GST. These two demons raised the poverty level in India. Falling in food spending indicates an increase in malnutrition.

Before this, declined was seen in 1972-73 and 1960s at the time of the oil crisis and due to the domestic food crisis.

According to a report, the average monthly spending in rural areas was Rs 643 in 2011-12 which reduced to Rs 580 in 2017-18. On the other hand, monthly food spending in urban areas saw a little increase from Rs 943 in 2011-12 to Rs 946 in 2017-18.

In 2011-12, monthly per-capita consumption expenditure had gone up by 13% over 2 years. These figures are real term, which means they have been adjusted for inflation considering 2009-10 as the base.

The survey found that rural Indians spent less on things such as oil, salt, and sugar and spices less except milk and milk products. Non-spending food at the time if the survey shows mixed data showed 7.6% declined and urban spending rose up by 3.8%.

Quoting experts, the report says the “most worrying” trend is that food consumption in rural India has declined by 10 percent, “implying worsening malnutrition in the country”.

Finding excuse- examining the survey

According to the ministry, there has been a noteworthy increase in differences in consumption type levels and the direction of change with data sources like the actual production of goods and services. There was also concern about the survey instrument’s capacity which captures the consumption of social services especially based on health and education. The Committee also recommended refining the survey methods and showed concerned on improving data quality aspects.

On the other hand, the Advisory Committee on National Accounts Statistics suggested rebasing the GDP series as according to 2017-18 is not suitable as the new base year. Although the ministry was considering making 2017-2018 as the new base year of GDP the economists disagreed as according to the introduction of demonetization and GST did not make this year a perfect fit to be as a base year.

According to the four sources quoted by the newspaper, the government forms a sub-committee to carefully re-examine the adverse findings. As per the sources, the committee finds the survey was correct.

According to former Planning Commission member Abhijit Sen, the real worry is in the area of welfare. “A fall in food spending, especially in villages, shows that malnutrition has increased. It would be fair to say that poverty must have increased significantly,” he said.

 These declined could lead the economy to a distraught situation that will lead to a decline in GDP. Most analysts assume Q2 GDP growth to reach 4%.

Prime Minister Narendra Modi promised “minimum government and maximum governance” – which means efficiency and growth – and failed to fulfill the same. It’s high time that the government should do the needful to its people rather than keeping itself engaged with other unnecessary activities of publicity, going abroad for get-togethers, etc. The government should realize that the economy needs some strong measures to get up.

After all, it’s we who made him the Prime Minister.

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