Engel’s Law and Expenditure Elasticities of Specific Food Items in India: 1950-51 to 1999-2000
Economic development involves an increase in national and per capita income and the consequent changes in the consumption pattern. A notable change in the pattern of consumption expenditure is expected due to change in per capita income. The pattern of expenditure is a good indicator of the economic status and the standard of living of the consumer and also shows the relative importance of individual items in the consumption pattern. As the economy develops, the level of income of its people increases and they begin consuming larger quantity and superior quality products. This process though quite gradual brings about changes in the pattern of consumption over time. The pattern of private final consumption expenditure on food commodity group and specific food items gives a broad idea of the change in household consumption pattern and is a direct measure of the living standard of the people. It is, therefore, desirable to analyse the pattern of consumption expenditure and the present exercise, therefore, deals with the analysis of the responsiveness of consumption expenditure on specific food items to the change in total consumption expenditure on food commodity group during 1950-51 to 1999-2000. Sign and magnitude of estimates of expenditure elasticities will prove to be useful in classifying the items of food into luxuries and necessities at a macro level.
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