Do it yourself

In my discussion on household economics in past two days, I have discussed the changes in the composition of household savings, debt and avenues for deployments of savings. (See here and here ) over past few years. In the concluding part, I would like to highlight some interesting trends in the household consumption in past 5-6years. Household expenditure in India has grown at a rate of ~13% CAGR over 6years during FY12-FY18. (i)     The expenditure on health has recorded the highest growth of 17.5% during this period. The available data does not clarify if the rise is due to rise in affordability or rise in incidence of disease. However, the anecdotal evidence suggests that it is a mix of both; though the rise in incidence of disease may account for almost three fourth of the incremental expenditure on health. (ii)    Miscellaneous goods and services now account for one sixth of the total household expenditure, and have the highest share...

Recently updated national account statistics highlights many interesting and noteworthy trends relating to household economics, especially consumption, investments and savings at the household level. The data also highlights the impact of demonetization on the household economics that may be the key to the understanding of current economic slowdown. Some of the noteworthy trends in household savings are as follows: (a)    Overall household savings have shown a declining tendency in past one decade. From a recent high of 24.3% of GDP in FY13, these have declined to 22.3% in FY18. (b)    Gross financial savings have recorded significant increase in the past few years. From 10.7% in FY12, gross financial savings had increased to 14.2% in FY18. The trend in Net Financial Savings has been little weak though, reflecting the rise in financial liabilities at household level, which have risen from 3.3% of GDP in FY12 to 5.6% of GDP in FY18. This h...