DETERMINANT OF CONSUMER SERVICE CONSUMPTION – A COMPARATIVE STUDY OF RURAL AREAS OF MAJOR STATES INCLUDING GUJARAT AND INDIA

Abstract

Three components, viz., income, consumption and savings are most invaluable indicators for economic development of any nation. From these three indicators, consumption plays vital role for the development process as high consumption encourages production activities which automatically leads to increase in employment and income generation which is again converted to consumption of miscellaneous goods and services. The rise in income results in higher demand of existing goods and services in the short run as well as in the long run. Even due to change in technology and fashion, the taste of population changes which results in demand of goods and services which were not existing previously. In this paper, rural areas of 15 major states, rural areas of 3 minor states and nation as a whole are considered to know the consumption pattern of non-food items. It is tried to analyze the effect of changes in income and relative price on different non-food goods and services. It is important to study the consumption of non-food items in the rural family as a part of service sector. In tis paper, per capita total consumption expenditure is taken as a proxy variable for per capita income, because more reliable data are available for the former as compared to the latter. Various models like linear, quadratic and power, have been fitted on consumer service consumption data, KEYWORDS – Consumer Service Consumption Expenditure, Total Consumption Expenditure, Rural Major States, Rural India, linear model, quadratic model, power model and concluded that power model is the most appropriate.