Spend on transport, health and education sector see a rise of 26.9%
In FY23, India experienced significant growth and development across various sectors, with a notable increase in the consumption of private services by the public
The share of expenditure on transport, health, and education in overall expenditure, saw a significant increase, rising from 26.1% in FY22 to 26.9% in FY23. It has exceeded the pre-pandemic level and marked the highest proportion since the new series began in FY12. The analysis indicates that the share of vehicle purchases in private consumption reached an 11-year high, standing at 1.7% in FY23.
This data for FY23 indicates a significant shift in the consumption pattern of private individuals within the country. These numeric attributions of spending towards these sectors show a growing recognition of their importance in meeting individual’s needs and improving overall quality of life. This underscores the evolving priorities and preferences of consumers towards essential components of daily life and personal development.
Indian government’s data released on Monday, illuminates the proportion of expenditure among the three sectors. Transport accounted for 17.3% of private consumption in FY23, compared to 16.6% in the preceding year. This points towards a substantial up-tick in spending on transportation-related expenses, reflecting an increased demand for vehicles and related services among private consumers. This trend suggests a notable shift in consumer behavior, potentially influenced by factors such as improving economic conditions, changing lifestyle preferences, and a renewed focus on mobility and convenience.
As the country progresses and moves towards higher per capita income, better GDP and development, there has been a noticeable trend of services claiming a larger portion of consumption in the economy. Despite this shift, the share of food expenditure remains substantial, accounting for 29.5% of consumption. Although this figure is lower than the peak of 31.6% observed in FY14, it still surpasses the level recorded in FY20, which stood at 28.8%.
This shift in consumption patterns suggests a dichotomy in the economy, reflective of a K-shaped recovery. In a K-shaped recovery, different segments of the economy recover at different rates or in different directions, leading to diverging outcomes for various groups or sectors. In this context, while services are seeing a rise in consumption, the fact that food expenditure remains significant indicates disparities in consumption behaviour across different segments of the population.
Experts interpret this dichotomy as evidence of an uneven recovery, where certain sectors or groups may be experiencing robust growth or improvement while others face challenges or stagnation. This divergence in consumption trends underscores the complex and multifaceted nature of economic recovery, highlighting the need for targeted policies and interventions to address disparities and promote inclusive growth.
As India aims to ascend in the global ranking of GDP and solidify its position as a major economy, there are several critical sectors that require improvement and development. These sectors play vital roles in shaping the overall economic landscape and contributing to sustainable growth and prosperity.