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HomeEconomyFewer restaurant visits & new clothes, more non-veg food — how Covid...

Fewer restaurant visits & new clothes, more non-veg food — how Covid affected Indians’ spending

According to govt data, food & household utilities were the only bundle of goods that witnessed a positive growth rate in 2020-21, the first pandemic year, compared to previous financial year.

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New Delhi: Two years ago, the Covid-19 pandemic struck India, changing life as we know it. The lockdowns that followed drastically affected livelihoods, wrecked the economy, and forced many to remain confined to their homes.

So, how did the pandemic impact over a billion Indians’ spending behaviour, which technically drives the economy?

According to the latest data released by the Ministry of Statistics and Programme Implementation (MoSPI) regarding consumption in the financial year 2020-21, Indians spent less on restaurants, hotels, alcohol, tobacco and clothes, but more on food, especially eggs, seafood and meat.

They cut down on soft drinks and juices, but didn’t skimp on their morning cup of tea or coffee, the data further showed.

While headline Gross Domestic Product (GDP) numbers tell us about the quantum of all the economic activity in a country, the private final consumption expenditure (PFCE) — a significant component of India’s GDP — is a measure of how much the people spend on consumption of goods and services.

The National Accounts Statistics, brought out by the MoSPI on 31 May, mapped consumption data for 2020-21 (revised estimates), which detail where Indians spent their money for consumption purposes. These numbers quantify the magnitude of change that happened across each retail industry. 

According to this data, food and household utilities were the only bundle of goods that witnessed a positive growth rate compared to the previous, non-pandemic financial year (2019-20), while spending on all other groups of items recorded a fall.


Also Read: Blame it on Covid: Fewer Indians taking to booze, those who drink are drinking more, finds NFHS


Big cuts in restaurant and hotel spending

According to the MoSPI statistics, the worst-hit consumer sectors in the pandemic year were — restaurants and hotels, clothing and footwear, durable and semi-durable goods, transportation, alcoholic beverages, tobacco and narcotics (intoxicants), and furnishing and recreation sectors. 

These sectors reported an over 10 per cent decline in growth in 2020-21 compared to 2019-20. In the same period, overall consumption in these sectors fell by 6 per cent.

In 2020-21, Indians spent Rs 92,671 crore on restaurants and hotels, while they spent more than twice as much — Rs 2 lakh crore — the previous year.  

On average, consumption in this sector was growing at 8.7 per cent per annum with an average spend of Rs 1.7 lakh crore in the five years preceding the pandemic — 2015-16 to 2019-20. 

The pandemic dealt a severe blow to the tourism industry, and, as a result, many hotels shut down. Due to Covid restrictions put in place at restaurants, their footfalls also dipped drastically.  

Credit: Prajna Ghosh | ThePrint
Credit: Prajna Ghosh | ThePrint

The restaurant and hotel sector on average (2015-2020) used to account for about 2.4 per cent of India’s domestic consumption spending, which was halved during the pandemic to just 1.2 per cent, MoSPI data shows.

According to Gurbaxish Singh Kohli, vice-president of the Federation of Hotel and Restaurant Associations of India, the industry had estimated a loss of Rs 1.4 lakh crore during the first pandemic year. 

“The consumption data GDP figures have corroborated our estimates and also justify our continued clarion call to the government for some specific relief measures for the industry to come out of distress,” Kohli told ThePrint. “Given the massive damages that decimated the sector’s ecosystem, the industry expected strong measures from the government to support hospitality and allied activities.”

22% drop in expenditure on clothes, footwear

Apart from restaurants and hotels, Indians also spent less money on clothing.

In 2019-20, Indians spent around Rs 4.43 lakh crore on clothes and footwear, which fell by 22.2 per cent in 2020-21. Consumption of these items was already growing slow at 1.3 per cent (calculated on the basis of MoSPI data), and this was exacerbated by the pandemic. 

Since the pandemic put the brakes on going outdoors, moving around and travelling, Indians reduced their spending on transportation by a great extent. In 2020-21, consumers spent Rs 12.27 lakh crore on transport — a 19.4 per cent fall compared to 2019-20 (Rs 15.23 lakh crore).

Alcohol consumption records steep fall

The pandemic year also saw consumption of alcoholic beverages, tobacco and narcotics (intoxicants) drop by around 16 per cent (overall). In 2019-20, Indians spent Rs 1.60 lakh crore on these items, which dropped to Rs 1.35 lakh crore in 2020-21. 

In this particular section, spending on alcohol recorded the steepest fall, going down to Rs 30,000 crore in 2020-21 from Rs 41,700 crore in 2019-20 — about a 26.8 per cent decline.

Spending on tobacco fell by 17.2 per cent and on narcotics (intoxicants) by 2.2 per cent.

Expenditure on furnishings fell by 13.4 per cent, recreation and culture fell by 11 per cent, and communication by 6 per cent, compared to 2019-20.

The category of miscellaneous goods and services usually accounts for 16 per cent of India’s overall domestic consumer spending. This segment includes personal care — ranging from bathing soaps to parlour/salon visits, ornaments, clocks, suitcases etc. 

Consumption of these personal care items declined by 4 per cent in 2020-21, according to the MoSPI data.

Where spending grew

The government’s consumption data estimates have shown that, unlike non-essential commodities — the spending of which can be deferred or postponed — spending on essential items like food and household utilities grew during the pandemic. 

The consumer spending on food and beverages (non-alcoholic) — the overall sector — grew by 3.9 per cent during the pandemic year, to Rs 23.5 lakh crore in 2020-21 from Rs 22.6 lakh crore in 2019-20. 

However, while the spending on food grew, consumer expenditure on non-alcoholic drinks fell by 16 per cent — to Rs 30,000 crore in 2020-21 from Rs 35,000 crore in 2019-20.

Under these non-alcoholic beverages, consumer spending on soft drinks, mineral water, fruit and vegetable juices fell by around 28 per cent (to Rs 15,000 crore in 2020-21 from Rs 21,000 crore in 2019-20). 

Spending on tea, coffee and cocoa fell by 0.1 per cent.

Before the pandemic, consumer spending on food and beverages was growing at an average rate of 6.52 per cent annually (2015-2020), according to MoSPI data.

Among food products, oils and fats recorded the steepest jump in spending (18.6 per cent) during the pandemic year, followed by food products not elsewhere classified (mostly spices) at 9.4 per cent. 

Consumer spending on animal products also witnessed significant growth during the pandemic. Spending on eggs jumped to Rs 22,500 crore in 2020-21 from Rs 21,000 crore in 2019-20. Spending on fish and seafood jumped by 4.8 per cent — to Rs 1.34 crore from Rs 1.27 crore — while spending on meat grew by 4.4 per cent in 2020-21.

The growth rate on all these items is based on how they were priced in 2011-12. Hence, the spending on these items was not impacted by present-day inflation.

(Edited by Gitanjali Das)


Also Read: Why is your tadka getting more & more expensive? Blame India’s reliance on edible oil imports


 

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