Introduction:
Macroeconomics is important part of economics. It includes various aspects like unemployment, fiscal policy, monetary policy, inflation, national income, saving, business cycle, economic policies, investment function and consumption etc. All those variables have their own significant.
Most of the time, we consider income as the major indicator of the economy. All government will encourage their people to save. But one should understand that “an attempt to increase savings by everyone may lead to a decrease in total savings (paradox of thrift).” This shows there should some powerful ways to look the economy and country prosperity. Consumption is the alternative tool for that.
The interaction of aggregate demand and supply determines the gross domestic product. Aggregate demand has two component- consumption expenditure and capital expenditure. Among these two, consumption expenditure is vital one. The following table will show importance of consumption;
| S.N. | Country | Contribution to GDP |
| 1 | Aggregate of World | 62% |
| 2 | Haiti | 100% |
| 3 | Singapore | 50% |
| 4 | USA | 70% |
| 5 | India | 66% |
The consumption includes durable goods, non-durable expenses and services consumption.
1. TITLE OF THE STUDY
Our attempt in this project is to study of “The consumption pattern of Hubli-Dharwar”.
2. OBJECTIVE OF THE STUDY
The specific objectives of the study are as follows.
2.1 Primary Objective:-
The Primary objective of this study is to carry on brief study consumption behavior of the residence of the Hubli-Dharwar people.
2.2 Other Objectives:-
· To understand priorities of expenditure of consumer.
· To measure the ratio they expend out of their income.
· To understand the changes in their consumption behavior and estimates the emerging consumption trend.
· To know the determinant of consumption.
· To examine that inflation will have effect on consumption or not?
· To know the relationship between consumption with saving, inflation, income, lifestyle, wealth, credit availability, expectation and number of family.
4. METHODOLOGY OF THE STUDY
4.1 The following methodology or procedure used in the project is as follows: -
· Defining the objectives of the study.
· Framing of questionnaire keeping objectives in mind.
· Feedback from the consumer of Hubli-Dharwar.
· Analysis of questionnaire in code sheet.
· Conclusion and findings.
4.2 Sampling Technique Used:
In this project, we have used convenience sampling technique.
4.3 Sources of Data Collection:
Information has based on two sources:
a) Primary data
Survey: Primary data was collected by survey with the consumer of Hubli-Dharwar.
b) Secondary Data:
To accomplish this project work few textbook and website.
5. SCOPE OF THE STUDY
As a part of Macro Economics for Manager, this project was undertaken for three month. It is an exercise and valuable opportunity to experiment and exhibit the recently acquired management skills.
It may beneficial for the company point of view because it helps them to analyze the future prospects of consumption pattern in this district.
6. LIMITATION OF STUDY
Some of the problems faced while conducting the survey are as follows:-
· Chances of some biasness could not be eliminated.
· The sample collected is only 50 and trying to generalize any conclusion will be hasty.
· Getting respondent is easy but difficult to keep him interested whole course of time.
Background to consumption pattern in Hubli-Dharwar:
Hubli-Dharwar is growing twin city of Karnataka. Dharwad district has its own peculiarity that the Urban population is more than rural population as per the 2001 census population the urban population is 8, 81,917 and total population of the district is 16,04,253. The density of population (person/sq km) is 377.
Urban- rural population
The percentage of urban population to the total population for the state is 35 % but in Dharwad the percentage is 55%. This is the special future of Dharwad district. This is only due to the Hubli-Dharwar cities of this district, which accounts 786195 i.e. 49% of total district population.
Employment Scenario
The favorable population and demographic situation accompanied with sound employment scenario has resulted into high consumption pattern in the twin city. In 2007, the total employment was 83,773 people and out of that 51,689 are government employee and private act establishment (above 25 employee) 29,720 and private non act establishment (10-24) is 2,364. The growing industrial estate and small enterprise has increase people income thus purchase power.
The following are the finding of the survey;
Ø People are more aware on sanitation facility. 94% respondent have good sanitation infrastructure. This is one major indicator of human index development.
Ø People are conscious on clean and hygienic drinking water. 50% people have municipality tap connection, mere 4% people depends on well water. Remaining people have multiple sources like bore well, municipality tap or both.
Ø People are updating source of fuel. The earlier tendency of using wood is decreasing drastically and LPG as source increasing. Only 10% household depends on wood as cooking fuel. And 4% households are merely depending on kerosene. 35% households are having kerosene and LPG as source of fuel.
Ø There is easy access of primary health for all people in Hubli-Dharwar city. Only 6% people feel that they do not have primary health access. It shows that there is enough infrastructures for primary health. May be people do not have will to access these facilities.
Ø The brighter side of Hubli-Dharwar household is there is significant development in saving habit. 92% people are saving their surplus for future uncertainties. Though, the portion they save is very trifle, but development on saving habit is much significant than the volume of the same.
Ø On saving habit, Peoples saving frequency is increasing more. This is also positive perspective of twin city.
Ø The aspiration of people are different, most of the people (33%) want to save or investment if there income will improve. Few people wanted to buy agricultural land; most of them want to spend money on durable goods. Few of them want to improve standard of living by adding money on services and non-durable materials.
Ø On brand conscious, people are aware of brand. But their income will not let them to go free will expenditure. Only 4% people committed, they prefer unbranded apparel. While 52% consumer are buying both.
Ø People are not conscious to keep account of expenditure.50% people said they keep account of what they expend.
Ø More people are aware of inflation. But they do not have any strategy to encounter it. Generally, they do not seek assistance to save because they save in saving account of commercial bank.
Let us seek correlation between consumption and various variables;
| Dependent variable | Independent Variable | correlation |
| Saving | Income | 0.4154 |
| Consumption | Wealth | -0.028 |
| Consumption | No of dependent | -0.040 |
| Consumption | Income | 0.12 |
| Total average saving rate as per income | 19.4% | |
| Total average expenditure as per income | 60.17% | |
Interpretation:
Ø The saving of people is moderately correlated with income of the people. As income will grew the saving habit will boost positively.
Ø The consumption and wealth has negative relation. When people go for adding wealth, they have to forgo current consumption. The increase in wealth will slightly reduce the consumption.
Ø There is low negative relation between no of family member and consumption. General assumption is more people more consumption. But our study is discarded this hypothesis. May be Hubli-Dharwar people will go for saving when they will have more dependent. It is too early to take on this result because sample size is just 48.
Ø Another major aspect, there is low positive correlation between income and consumption. When people income will increase they will consume more but not to the ratio of extra earned. This is also positive sign of growing Hubli-Dharwar city’s saving and investment.
Ø Our survey has revealed that Hubli-Dharwar city people save Rs19.40 for each of Rs100 earning. This is good sign for future growth and stable economy of city.
Ø The vital finding of our study is “this twin city has 60.17% expenditure which is little lesser than national expenditure which counts 66%”. This average is near to equal to world average expenditure.
Managerial Application: There is huge scope for banking, insurance and financial services industry because of conservation on expenditure or more saving of people.
Note: This project was submitted to Prof. Dr. Maruti Rao as a part of final project for Macro Economics For Manager.
