Financial Daily from THE HINDU group of publications
Monday, Mar 28, 2005
Industry & Economy - Economy
On the trail of money that leaves consumers' hands
Chennai , March 27
CONSUMER spending on personal care and effects totalled Rs 34,000 crore in 2002-03. Household expenditure on spices was Rs 1,000 crore higher.
Households spent Rs 6,789 crore on personal transport vehicles in 2002-03. More than Rs 75,000 crore were spent on running and maintaining these vehicles.
Money spent on the purchase of personal transport services, Rs 132,000 crore, was 60 per cent higher than both the figures combined.
Personal care and effects accounted for 2 per cent of the total private consumption expenditure in the domestic market. Personal goods `not included elsewhere' accounted for another 3 per cent.
Expenditure on clothing accounted for 4 per cent; a marked shift in market preferences. In 1993-94, clothing beat the other two categories combined, with spend aggregating Rs 31,000 crore; 5.4 per cent of the total consumption, compared to 1.9 per cent for personal care and effects and 2 per cent on personal goods not included elsewhere.
Only Rs 3,851 crore were spent on refrigerators, washing machines, and other domestic appliances; about the same amount as the spend on furniture and furnishings, which is even today almost entirely in the informal sector, despite the efforts of some large domestic and multinational firms to grab a share for themselves from this huge but hitherto relatively untapped market.
Total spend on hotels and restaurants, at Rs 23,000 crore, was very much higher. Beverages are one of the fastest growing markets. Their rate of growth leaves expenditure on personal care equipment, vehicles, white goods and so on far behind.
Though the total market for beverages is still relatively small (Rs 21,000 crore in 2002-03), their share in total consumption has more than doubled since 1993-04; from 0.5 to 1.3 per cent. Expenditure on spices, at Rs 35,000 crore , was 250 per cent higher than expenditure on tea, coffee and cocoa put together.
Here again we find a case of the unorganised sector beating the corporates hollow.
Another interesting thing is that the market for footwear seems to have shrunk considerably, even in terms of current prices. A typo? Probably not. Consumer spend on footwear has been consistently reported at Rs 8,000 crore or Rs 9,000 crore each year since 1999-2000.
Until then this sector grew rapidly, increasing its take by leaps and bounds. But it levelled off thereafter; perhaps reflecting a diversion of this spending power to foreign products.
None of these figures would be available in GDP statistics, even if these were available at this level of disaggregation. GDP computes only the value added by this or that line of production of goods and services. Only figures for private consumption expenditure, usually published along with GDP estimates but not so widely known, give an idea of the size of markets for various items, and their rate of growth overtime.
For those who are interested, such figures are also available in constant prices. But for practical purposes, from the business point of view, figures in current prices are more worth focusing on. Who cares how fast the GDP is growing at constant prices?
Figures on the size and rate of growth of various markets at current prices are more useful for assessing what portion of total spend you have been able to capture; or could reasonably hope to capture if you chose to do so.
The accompanying table provides raw data for those who think along these lines.
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