Reviewed by Sep 30, 2020| Updated on
Consumerism is a concept which says that enhanced consumption of services and goods in the market is always welcomed. Also, an individual's happiness and well being rely predominantly on purchasing consumer goods and services.
With respect to economics, consumerism is mostly related to a Keynesian concept which says that consumer spending is a critical factor which majorly impacts the economy and encourages consumers to go on and spend their money as a key policy objective. Hence, from this perspective, consumerism is considered a positive factor which facilitates economic growth.
The overall consumption in India has dropped of late. This reduced consumption has had a major impact on Indian economic growth. The GDP growth rate has fallen to record levels. In order to boost the economy, the Indian Government and the Reserve Bank of India (RBI) have come up with various measures. The RBI has cut interest rate consecutively several times this calendar year (2020), the most by any Asian central bank this calendar year.
Healthy consumption is a big positive for the economy as it indicates that people are ready to spend; this ensures that there is a circulation of money in the economy. However, if consumption drops, then it indicates underlying problems. It may be due to a high unemployment rate, increased interest rates, and so on. Hence, consumption can be considered an indicator of the overall economic health of a country.
Reduced consumption may result in deflation, meaning the supply will be more than the demand. This may lead to losses for the vendors and manufacturers. Lower consumption can also result in lenders not finding enough borrowers and thereby reducing their revenues.
Consumerism is a theory which states that individuals consuming in excessive quantities are well off. There is a belief amongst economists that increased spending will lead to enhanced economic growth and production. Consumerism is sometimes criticised for its psychological, social, economic, and environmental consequences.