Lok Sabha Question No. 1367 (UNSTARRED), answered on 2019-11-25
Subject: Consumption Growth
Ministry: FINANCE
Asked by: Balubhau (Alias Suresh Narayan) Dhanorkar

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA

## UNSTARRED QUESTION NO. 1367

## TO BE ANSWERED ON NOVEMBER 25, 2019

## CONSUMPTION GROWTH

1367. SHRI BALUBHAU ALIAS SURESH NARAYAN DHANORKAR:

Will the Minister of FINANCE be pleased to state:

- (a) whether the consumption growth has sunk from 13 per cent consumption led growth to 3.9 per cent;
- (b) if so, the details thereof and the reasons therefor;
- (c) the details of such five States where the consumption rate has depleted the most; and
- (d) the steps taken by the Government to improve the sinking consumption rate?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI ANURAG SINGH THAKUR)

- (a) & (b) Consumption expenditure remained the major contributor in growth of Gross Domestic Product (GDP) for the Indian Economy with more than 70 percent share in GDP at current prices in 2017-18 and 2018-19. Growth rates of real consumption expenditure in last three years are given below.
- (c)  National Statistical Office does not compile state wise consumption expenditure data.

Table 1: Growth of total consumption expenditure at constant (2011-12) prices (percent)

|                                                        | 2016-17 (2 nd RE)                                      | 2017-18 (1 st RE)                   | 2018-19 (PE)                        |
|--------------------------------------------------------|--------------------------------------------------------|-------------------------------------|-------------------------------------|
| Total final consumption expenditure                    | 7.8                                                    | 8.6                                 | 8.3                                 |
| Note: RE - Revised Estimate, PE - Provisional Estimate | Note: RE - Revised Estimate, PE - Provisional Estimate | Source: National Statistical Office | Source: National Statistical Office |

(d)  Government  has  implemented  various  measures  to  boost  consumption  growth.  To  boost  rural consumption, Government  had  expanded  the  cash  transfer  scheme  Pradhan  Mantri  Kisan  Samman Nidhi (PM-KISAN) providing an income support of Rs.6000 per year to all farmers, which was limited to farmers  with  a  land  holding  of  less  than  2  hectares.    Mahatma  Gandhi  National  Rural  Employment Guarantee Scheme (MGNREGS) is focusing more on the distressed districts of the country. Recently, Government has announced a number of measures to give a boost to consumption growth, which interalia ,  include  additional credit expansion through infusion of Rs.70,000 crore into public sector banks; approval  of  a  realty  fund  worth  Rs.25000  crore  for  stalled  housing  projects;  deduction  of  additional income tax of Rs.1.5 lakh on the interest paid on loans taken to purchase electric vehicles; and more credit support by strengthening of Non-banking Financial Companies and Housing Finance Companies through partial credit guarantee scheme. Besides, the Reserve Bank of India has cut the repo rate by 135 basis points between February and October 2019 for reducing the lending rates of banks with a view  to  encourage  consumption  in  the  economy.  The  RBI  has  further  mandated  banks  to  link  their lending rates to external benchmark including the repo rate for lowering the lending rates.