Choice between Current and Future Consumption Expenditure during Pre and Post New Economic Policy in Indian Economy
Published: 2013
Author(s) Name: Ritu Sharma |
Author(s) Affiliation: Assistant Professor, Institute of Management Studies, Noida, Uttar Pradesh, India.
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Abstract
Theory predicts inverse relation between consumption and
savings. At any given level of income, increase in
consumption results in lowering of savings and vice versa.
Hence there is a tradeoff between consumption and
savings/investment. Consumption and savings are
however, directly related with income. Both consumption
and savings play pivotal role in growth of income. Low
income results in low consumption and low savings, high
proportion of income being absorbed by consumption.
Consequently share of savings increases with increase in
income. Substitution takes place between consumption
and savings with changes in income. This aspect of growth
however has not been adequately researched in Indian
economy.
Keywords: Substitution, Consumption, New Economic Policy, Choices, Structural Change
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