1965-66

1967-68

1969-70

1971-72

1973-74

1975-76

1977-78

1979-80

1981-82

1983-84

1985-86

1987-88

1989-90

1991-92

1993-94

1995-96

1997-98

1999-00

2001-02

2003-04

2005-06

2007-08

2009-10

2011-12

2013-140

10000

20000

30000

40000

50000

60000

70000Consumption and GDP vs Time

Consumption (C )

GDP (Y) (at Constant price)

Years

GDP/

Cons

umpti

on (i

n IN

R bi

llion

)

Household consumption as a part of GDP has gone down from being about 80 % in 1965 to about 60 % in 2014. This is mostly because of increased government and private investments. Still Consumer spending being 60 % of GDP is the engine for growth of GDP. However after posting a growth of 7.9 % in 2011-12, it posted a moderate growth of 4 % in 2012-13

Even in the financial crisis of 2008-09, growth in consumer spending sustained its momentum because of low interest rates in country, implementation of 6th Pay Commission and rising rural income.

However to fight inflation which was touching double digit figure, there has been increase in interest rate by RBI. This reduced the purchasing power of the households resulting in moderation of household spending .