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Choice between Current and Future Consumption Expenditure during Pre and Post New Economic Policy in Indian Economy
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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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