The rising per capita income is proving to be a bonanza both for individuals and the economy as an average Indian is showing an uptrend in savings, in spite of increasing consumption expenditure.
According to the Economic Survey 2007-08, tabled in the Parliament on Thursday, the per capita consumption in the current fiscal would be 57.56 per cent of the income, a drop from the average 61 per cent and 64 per cent witnessed during the Tenth and Ninth Five Year Plans.
With a per capita income of Rs 29,786 and consumption of Rs 17,145, Indians on an average would be left with a surplus of Rs 12,641 -- an amount nearly double of what they retained during the Ninth Plan period.
During the Ninth Plan (1997-2002), the gap between the per capita income and consumption stood at Rs 6,853, just half of the projections for the current fiscal.
While, during the Tenth Plan (2002-2007) period, the per capita income stood at Rs 24,156 and the consumption was Rs 14,677, leaving a surplus of Rs 9,479.
As per the Survey, the average growth of consumption is slower than that of income, primarily because of rising saving rates, though rising tax collection rates can also widen the gap.
The consumption growth rate on per capita basis has increased to 5.1 per cent per year during five years from 2003-04 to 2007-08, with the current year's growth expected to be 5.3 per cent, marginally higher than the five-year average.
Year-to-year changes also suggest that rise in consumption is a more gradual and steady process, as any sharp changes in income tend to get adjusted in the saving rate. Gross domestic savings as a proportion of GDP rose to 34.8 per cent in FY'07 from 26.4 per cent in FY'03, with an average of 31.4 per cent during Tenth Plan.
