Understanding Trends in Consumption

We discussed that what left after the consumption is “saving”. So, Gross Domestic Saving is the Gross Domestic Product minus final consumption.
The estimates of private consumption expenditure are generated in India by two agencies, viz. Central Statistical Organisation (CSO) and National Sample Survey Organisation (NSSO).
  • CSO estimates in National Account Statistics (NAS) are obtained using commodity flow approach, while
  • NSSO estimates are based on Household Consumption Expenditure Surveys (HCES).
  • Both of them follow two entirely different methodologies.

Private Final Consumption Expenditure (PFCE)
The estimates of Private Final Consumption Expenditure (PFCE) are compiled annually as apart of the National Account Statistics (NAS) by CSO using commodity flow approach. In this approach, the estimates of quantum and value of different commodities produced and available are used, flowing finally into the consumption process of houses and the private Non-Profit Institution Serving Household (NPISH) during the financial year. The sum of the commodity-wise estimates gives the aggregate estimates of the PFCE.
Household Consumption Expenditure Surveys
The NSSO estimates are based on Household Consumption Expenditure Surveys (HCES), which are conducted in every five years with a much larger sample and annually with a relatively thin sample. In this sample survey, the consumption expenditure of a random sample of households is ascertained directly by canvassing a well-designed schedule of enquiry. Though HCES directly does not provide the countrywide total consumption expenditure, the NSSO estimate of total household consumption expenditure of the domestic economy can be obtained as the product of estimates of annual per capita consumption expenditure and the population projections based on the population census.
List of Topics : Economic Survey 2010-11

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