Consumption Functions of India: Pre and Post Covid-19

Kasturi, Alivelu; Bhattarai, Keshab; Prasuna, Asha; Siva Kumar, S N V

Abstract

Consumption is essential for living for every individual. Better consumption is the most important economic goal of every individual from rich or poor households whether they are located in urban or rural areas. There is huge theoretical and empirical literature in the micro and macroeconomics discussing important factors that determine, level, growth, distribution of consumption in a particular time or over the years. COVID-19 global pandemic had seriously affected consumption of individuals in every part of the world. Focus of this paper is on estimation of consumption functions of rich and poor households located in rural and urban areas in India and its twenty-eight states. Major findings of this study are that the marginal propensity to consume is 49.8 percent in India from macro time series for 1990-2020. At micro-Household level data still shows positive and significant impact of income on consumption but the MPC is a lot lower than at the macro level. Urban areas have higher consumption than that in rural area. Also, huge differences across states were also observed.

Citation

Kasturi, A., Bhattarai, K., Prasuna, A., & Siva Kumar, S. N. V. (2023). Consumption Functions of India: Pre and Post Covid-19. Journal of Development Economics and Finance, 4(2), 451-463. https://doi.org/10.47509/JDEF.2023.v04i02.09

• Journal Article Type: Article
• Acceptance Date: Nov 4, 2023
• Online Publication Date: Dec 1, 2023
• Publication Date: Dec 1, 2023
• Deposit Date: Dec 1, 2023
• Publicly Available Date: Dec 6, 2023
• Journal: Journal of Development Economics and Finance
• Publisher: ARF India
• Peer Reviewed: Peer Reviewed
• Volume: 4
• Issue: 2
• Pages: 451-463
• DOI: https://doi.org/10.47509/JDEF.2023.v04i02.09
• Keywords: Consumption functions; MPC; India
• Public URL: https://hull-repository.worktribe.com/output/4461283
• Publisher URL: https://www.arfjournals.com/image/catalog/Journals%20Papers/JDEF/2023/No%202%20(2023)/9_Alivelu.pdf