Keywords
Demand Estimation
Consumption Demand
Demand Analysis
Consumption Expenditure
How to Cite
Abstract
The formulation of economic policy primarily depends on the role of consumer behaviour. Any change involving the demand pattern of individuals have major consequences on the growth, trade and development of a country. Demand models play an important role in evaluating the indirect tax policy reform. The study provides a comparative analysis of demand for selected food items for Assam, using secondary data from National Sample Survey (NSSO) 66th and 68th rounds. Through a comprehensive analysis of consumer expenditure data, the paper demonstrates the theory behind demand estimation and highlight the importance of selecting appropriate demand system models based on the specific characteristics of the data and the policy questions at hand. The findings reveal significant transitions in consumption preferences over time, with "committed consumption" increasing for cereals, sugar, salt, and oil, while declining for pulses. The expenditure elasticity of cereals decreased, reflecting reduced demand sensitivity to income changes, while the elasticities of other commodities increased. The study also highlights differences in gross substitute and gross complement relationships between the two rounds. These results underscore the importance of developing nuanced fiscal policies for rural and urban sectors, tailored to address evolving dietary behaviors and socio-economic factors.
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