File photo | Photo Credit: DANISH SIDDIQUI

The economic slowdown seems to have gripped households, too, as the number of consumers who think they will spend less on goods and services has gone up.

A Reserve Bank of India (RBI) survey has sharply cut the forecast of real private final consumption expenditure (PFCE) growth, reflecting lower household demand as indicated by moderation in the production of consumer durables.

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The forecast of real PFCE growth has been revised sharply down by 250 basis points from 8 per cent in the May 2019 round of the RBI’s survey of professional forecasters to 5.5 per cent in the September 2019 round.

In this regard, the RBI’s latest monthly bulletin also referred to capital goods production declining by around 8 per cent in the April-August 2019 period.

PFCE, however, is expected to improve to 7 per cent during 2020-21, per the latest survey. The PFCE growth forecast has been pared from 8.1 per cent in the March 2019 survey to 8 per cent in the May 2019 survey to 7.6 per cent in the July 2019 survey.

PFCE, according to the Ministry of Statistics and Programme Implementation, includes final consumption expenditure of households and non-profit institutions serving households like temples and gurdwaras.

The final consumption expenditure of households relates to outlays on new durable as well as nondurable goods (except land) and on services.

The forecast of real gross fixed capital formation (GFCF) growth rate was revised down to 6 per cent in the September survey from 7.6 per cent in the preceding survey.

GFCF consists of the outlays (purchases and own account production) of industries, producers of government services and producers of private non-profit services to households, on addition of commodities to their stocks of fixed assets less their net sales (i.e. sales minus purchases) of similar second-hand and scrapped goods. Excluded from GFCF are the outlays of government services on durable goods for military use.

GFCF includes acquisitions of reproducible and non-reproducible durable goods (except land, mineral deposits, timber tracts, fisheries and the like) for civilian use, work-in-progress on construction projects; capital repairs, outlays on the improvement of land and on the development and extension of timber tracts, plantations, vineyards, etc., among others.

The median forecast of growth in GDP for FY 2019-20 has been cut to 6.2 per cent in the September 2019 survey from 6.9 per cent in the previous survey. However, the GDP is expected to pick up to 7 per cent in FY2021.