Q2 GDP data | Private consumption, government spending rise sharply

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Household consumption rose in the second quarter (July-September) of FY22 despite Covid-19 second wave, boosting hopes of a quicker recovery in consumer demand in the months ahead, latest data released by the National Statistics Office (NSO) showed.

Private Final Consumption Expenditure (PFCE), which is a significant component of overall Gross Domestic Product (GDP) numbers, rose by 8.61 percent over Q2FY21's number, and came in at Rs. 19.48 lakh crore. However, when calculated against Q2FY20, PFCE remained 3.53 percent lower.

PFCE is a vital indicator to gauge household spending in the country. This includes all the items that a private individual consumes, whether it is toothpaste or a car.

In the second quarter of FY22, PFCE constituted 54.5 percent of GDP, down  from 55.1 percent in Q1 FY22.

The growth in numbers is visible in the country’s economy that grew by 8.4 percent in Q2.

"While consumption has recorded an improvement, a more broad-based consumption recovery would be critical for sustainable and inclusive growth. For that to happen it will be critical for the unorganized sector and the MSME segment to also bounce back quickly," said Rajani Sinha, Chief Economist and National Director - Research, Knight Frank India.

Government Spending 

On the other hand, government expenditure also rose by 8.72 percent, after the Centre announced a slew of schemes hoping to raise demand in the economy.

This comes after the Centre raised levels of public spending to generate more jobs and create demand in the economy. At 3.61 lakh crore, Government Final Consumption Expenditure (GFCE) constituted 10.1 percent of the GDP, down from 13 percent in Q1FY22.