Potential Challenges to India's Economic Growth Due to Waning Urban Consumption
Urban consumption is slowing down, impacting overall economic growth.
Private final consumption expenditure (PFCE) grew only 4%, the weakest since 2002-03 (excluding COVID-19 year).
Elevated interest rates are reducing urban consumer spending capacity.
Surveys indicate declining confidence among urban consumers regarding current and future spending.
A drop in passenger vehicle sales signals reduced urban demand.
Persistently high food inflation limits discretionary spending, affecting overall consumption.
Weak consumption can stall private investments, hindering job creation and economic growth.
Private Final Consumption Expenditure (PFCE)
PFCE measures expenditure incurred on the final consumption of goods and services by the resident households and non-profit institutions serving households.
It reflects consumer spending behavior, crucial for assessing economic health.
Components: Includes spending on durable goods (e.g., cars), non-durable goods (e.g., food), and services (e.g., healthcare).
A key driver of GDP, indicating the level of demand in the economy.
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