Why is the increase in harvest good news to local consumers
Answers
Answer:
Consumption plays a major role in boosting economic growth in the country, with Private Final Consumption Expenditure or PFCE constituting almost 60 per cent of the GDP. Fiscal 2018-19 hasn’t been particularly good for consumption. Amidst the gloom, the Survey brings good news that the Indian consumer is upgrading. This implies that even as volume growth may take a backseat for companies in consumer sectors such as FMCG (fast moving consumer goods), auto and consumer durables, they reap the benefits of higher profit margins from the bettering product mix.
Explanation:
According to the Survey, data from fiscal 2011-12 onwards show that there has been a shift in the spending of the Indian consumer from food & beverages and transport & communication which are more of necessities, towards clothing & footwear, health & education, housing & maintenance, which are considered discretionary items (see graph).
The survey points that this is a further improvement from the numbers captured by NSSO’s Household Consumption Survey from the early 2000s. Share of food (predominantly cereal, milk and milk products, vegetables) in monthly per capita consumption expenditure which stood at 48.1 per cent at the turn of the millennium, came down to 42.6 per cent by 2011-12 and further declined in the last few years. On the other hand, spends on durable goods or services such as health and education have been steadily rising since 2000. With per capita national income and per capita consumption showing high elasticity, it can be deduced that consumers are increasing their discretionary spends as their income levels go up.
The increase in harvest is good news to local consumers because -
• The availability amount of the goods is inversely proportional to the price of that object.
Which means, if an object is easily available in the market then the price of that object will go down.
Now,price decrease is always a good news for the consumers.
• If the local production of an object is enough for the market demand then importing is unnecessary which also decrease the price of that object in the local market.
Similarly,the enough production of agricultural products will decrease the price of those products in the local market. This is surely a good news for the consumers.