Consumer spending on health, transport, and education peaks at 26.9%.

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India experienced a notable shift in private consumption patterns during the fiscal year 2022-23 (FY23) according to official data. The data indicates a significant rise in the share of expenditure on transport, health, and education, reflecting evolving consumer preferences and economic dynamics.

In FY23, the combined share of transport, health, and education in private final consumption expenditure increased to 26.9%, surpassing the pre-pandemic levels and marking the highest point since the inception of the new series in FY12. This shift signifies a departure from traditional consumption patterns and underscores the growing importance of these sectors in the lives of Indian households.

One of the standout observations from the data is the surge in vehicle purchases, reaching an 11-year high of 1.7% of private consumption expenditure in FY23. This indicates a heightened interest and investment in personal mobility, potentially driven by factors such as urbanization, changing lifestyles, and improved access to credit.

Transport, as a component of private consumption, saw a notable increase, accounting for 17.3% in FY23 compared to 16.6% in the previous fiscal year. This rise suggests a greater allocation of resources towards commuting, travel, and related services, reflecting the expanding role of transportation in daily life.

Furthermore, the data highlights the growing prominence of services in the consumption landscape. With the country advancing towards higher per capita income levels, services have emerged as a significant contributor to private expenditure. However, the share of food expenditure, while still substantial at 29.5%, has seen a decline from its peak of 31.6% in FY14, indicating a shift towards non-food expenditures.

Experts analyzing the consumption trends emphasize the presence of a dichotomy, indicative of a K-shaped recovery post-pandemic. This recovery is characterized by disparities in discretionary spending versus consumer staples, the rural-urban divide, and variations in demand between affluent and broad-based household segments.

Tanvee Gupta Jain, an economist at UBS India, notes that while India is poised to become the third-largest consumer market globally by 2026, sustaining consumption growth hinges upon quality job creation. Jain forecasts a slowdown in consumption growth to 4-5% in FY25, compared to the 6.5-7% annual average witnessed between FY11 and FY20.

The evolving consumption patterns in India underscore the changing priorities and aspirations of its populace. The increased emphasis on transport, health, and education expenditures reflects not only economic shifts but also societal transformations. As India navigates through these changes, fostering inclusive growth and creating employment opportunities will be crucial in sustaining and further enhancing consumer spending in the years to come.