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Project Report on

Private Expenditure
&
Change in GVA in India’s
GDP

Submitted To : Submitted By :
DR. Sahana Roy Chowdhury Akshay Kapoor

Anushree Ashish Mahajan

Anjali Padhy
Harshita Agarwal
Udiyt Ghai
DECLARATION

We hereby declare that the Project entitled “ Private


Expenditure & Change in GVA in India’s GDP in our
Economy” submitted to Dr. Sahana Roy Chowdhury (Faculty
Member)Business and Economic Policies, IMI KOLKATA in partial
fulfillment forthe award of the degree of PGDM and the project has not
previouslyformed the basis for the award of any other degree,
diploma, associateship, fellowship or other title

India’s Private Consumption Expenditure was reported at 417.766 USD bn in Sep 2019.
This records an increase from the previous number of 406.371 USD bn for Jun 2019.
India’s Private Consumption Expenditure data is updated quarterly, averaging 169.827
USD bn from Jun 1996 to Sep 2019, with 94 observations. The data reached an all -time
high of 422.189 USD bn in Mar 2019 and a record low of 59.752 USD bn in Sep 1996.
India’s Private Consumption Expenditure data remains active status in CEIC and is
reported by CEIC Data. The data is categorized under World Trend Plus’s Global
Economic Monitor – Table: Nominal GDP: Private Consumption Expenditure: USD:
Quarterly: Asia. CEIC converts quarterly Private Consumption Expenditure into USD.
Central Statistics Office provides Private Consumption Expenditure in local currency
based on SNA 2008, at 2011-2012 prices. Federal Reserve Board average market
exchange rate is used for currency conversions. Private Consumption Expenditure prior
to Q2 2011 is based on a combination of SNA 2008 and SNA 1993, at 2004 -2005 prices
and prior to Q2 2004 is based on SNA 1993, at 1999-2000 prices.

Related Indicators for India Private Consumption Expenditure


Investment Expenditure
Although private investment growth in India will remain challenging in the short
term, it will eventually pick up in 2018-19 to overtake private consumption as the
main driver of economic growth, the World Bank said in its latest ‘India Economic
Update’ released on Monday.
Gross fixed capital formation (GFCF), which indicates investment demand in the
economy, is forecast to grow by 3.3% in FY17, jump to 6.8% in FY18 and overtake
private consumption (7.4%) in FY19 with 8.8% growth to become the major growth
driver.
This is due to the key reform steps taken by the government such as implementation
of bankruptcy law and goods and services tax, higher infrastructure push and
continued inflow of foreign direct investment, the Bank said. “Abolition of Foreign
Investment Promotion Board will further support investment growth. Moreover, RBI
efforts to reform banking sector in addition to a higher steady state of banking sector
deposits post-demonetization will eventually allow credit growth to recover robustly
and sustainably," it added.

Private investment continues to face impediments in the form of corporate debt


overhang, stress in the financial sector with rising bad loans, excess industrial
capacity, and regulatory and policy challenges, putting downside pressures on India’s
potential growth.
“On the positive side, consumption will remain robust, given declining inflation and
solid household credit growth, and pick-up in trade is likely to endure at least through
the first half of the fiscal year, helping lift investment," the Bank said.

Supporting the view of an incipient pick-up, production of capital goods expanded by


6.8% in January 2017 after 13 consecutive months of negative growth, imports of
machinery rose by 13.5% in March, and FDI expanded by 10.9% in Q3 FY17 driven
primarily by investments in the telecommunications sector.
At a time of weakness in investment growth, private consumption remains a stable
growth driver, expected to range between 7.2% and 7.5% between FY17 and FY20.
The minor deceleration in FY17 is offset by higher rural incomes from favourable
agricultural growth, revisions to civil servants’ pay by an average of 24%, and
declining inflationary expectations.
Sunil Kant Munjal, chairman, Hero Enterprise agreed with the World Bank’s
assessment that next year could see a revival in private investments. “Companies do
not invest because they see little scope for return. Now capacity is getting absorbed
and consumption is increasing, companies are looking at investing in the months to
come," he added.
The Bank expects government to maintain its momentum in public infrastructure
spending, with government capital expenditure budgeted at 3% of GDP in FY18, flat
from previous year. “Private investment is expected to pick up, but only gradually as
recovery may be protracted, in part due to relatively longer-term effects of
demonetization on cash-reliant construction activities (household investment,
largely housing, accounts for approximately 1/3 of total investment), corporate
leverage and the persistent weakness in credit growth, which suggest that the
financial sector may require more time to adjust," it said.
The National Statistical Office (NSO), Ministry of Statistics and Programme Implementation has
conducted the survey on Household Social Consumption related to Health during the period July 2017 to
June 2018 as a part of 75th round of National Sample Survey (NSS). Prior to this, there have been three
such surveys – carried out, in 1995-96 (52nd round of NSS), 2004 (60th round of NSS) and 2014 (71st
round of NSS). 2. The main objective of the survey was to gather basic quantitative information on the
health sector viz. morbidity, profile of ailments including their treatment, role of government and
private facilities in providing healthcare, expenditure on medicines, expenditure on medical consultation
and investigation, hospitalisation and expenditure thereon, maternity and childbirth, the condition of
the aged, etc. 3. The present survey was spread across the country and data were collected from
1,13,823 households (64,552 in rural areas and 49,271 in urban areas), covering 5,55,115 persons
(3,25,883 in rural areas and 2,29,232 in urban areas), following a scientific survey methodology.