Household
Also called: Household sector · Topic: National Income Accounting: GDP, GVA and Welfare · NCERT: Class 7, Ch 12 "Understanding Markets"; Class 12, Ch 1 "Introduction (Macroeconomics)"; Class 12, Ch 2 "National Income Accounting"
Meaning
A household is one person, or a group of people, who make consumption decisions together. Households supply factor services (labour, land, capital and entrepreneurship) to firms. In return they earn wages, rent, interest and profit. They spend part of this income on consumption, save part of it and pay taxes. Household consumption is the largest part of spending in India's GDP.
Example
A family in Pune earns a salary from an IT firm and rent from a flat it owns. It spends on food and school fees, saves in a bank and pays income tax. In 2024-25, household consumption (PFCE) was ₹106.20 lakh crore, about 56.5% of India's GDP (Provisional Estimates, constant 2011-12 prices).
Don't confuse with
- Firms: firms buy factor services and produce goods for sale. Households sell factor services and consume.