Structural breaks in consumption patterns: India 1952-1991

This study improves upon the econometric modelling for testing and incorpor ating structural breaks for a study on Indian consumption patterns covering a period of four decades and also explores the causes of such breaks. The tests for structural breaks in consumption patterns indicate multiple break points which are not uniform across the population groups and also across commodity groups. Further, the results indicate for the first time, that th e breaks could often be induced by the changes in the data collection metho dology of the survey and not due to changes in consumer behaviour alone. Ap art from this, there is a shift in the consumption pattern during the mid-1 980s in both the rural and the urban sectors. For the lowest expenditure cl ass the shift is away from food items with the rural sector showing a chang e in the price response and the urban sector showing a change in the total expenditure coefficient. For the middle and the upper expenditure classes t he shifts are not only from the food items towards non-food items but also from the 'food' group that includes items like cereals, milk and milk produ cts towards the 'other food' group which includes items like vegetables and fruits. Its causes are found to be changes in preferences as well as the i ncome effect.