The Telegraph
Since 1st March, 1999
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- Consumption as an excellent reflector of social change in India

Purchases by households of cassette recorders fell in 1998-99 and have been falling sharply since 1996-97; that of table fans has been relatively static since 1994-95; that of motor cycles has been growing faster than scooters, but more scooters were bought than motor cycles even in 1999-2000; growth in purchases of pressure cookers and VCR/VCPs has been good but black and white television sets have been static while colour television purchases have been booming since 1995-96; sewing machines have again begun to grow since 1995-96. Rural purchases account for over 70 per cent of purchases of bicycles, portable radios, sewing machines, black and white television sets and mechanical wrist watches.

Financing of purchases for white goods has come down from 25 per cent in 1992-93 to 16 per cent in 1998-99. The decline is inexplicable especially since the purchase of white goods has grown by around 19 per cent per annum over the Nineties. Among consumable products there has been a slowing down in purchases of cooking oils and vanaspati, hair oils and creams, tea, toilet soap, tooth powder and washing powder.

High growth continues for footwear of all kinds, packaged biscuits, and toothpaste and washing cake. Over 55 per cent of purchases are from rural India for cigarettes, cooking oils, footwear, hair oils, shampoos, tea, toilet soap, tooth powder, washing cake and washing powder. Could it be that consumers are downgrading their purchases of consumables so as to buy durable and white goods'

The data is available by income categories, towns, urban and rural India, occupational classes and regions of India. There is a wealth of information about the changing lifestyles of households and the data should be a dream for sociologists and economists. Unfortunately, it is mainly business people who have mined this data over the years, to their profit. Our intellectuals have a snobbish attitude to consumption and have shown little interest in analyzing the implications of the trends thrown up by this data.

The scorecard of India’s income distribution, product purchase penetration and market leadership now available till 1998-99 is from the market information survey of households that the National Council for Applied Economic Research has been bringing out since 1985. These data have, over the years, been responsible for attracting enormous investor interest in India. It has changed the perception of poverty-stricken India. Despite poverty it constitutes a vast and fast-growing market.

The NCAER started the market survey of households in 1985 and has released it irregularly from 1991. It used a huge sample size of 500,000 and covered every district in India. No survey other than the National Sample Survey had conducted such large surveys ever before. The latest survey has a sample size of 272,944 in 809 villages and 515 towns for durable consumer goods and 25,221 for expendable consumer goods, a total of almost 300,000. The rising penetration of purchase of consumer products has enabled a reduction in sample sizes.

The NSS was a product of the asceticism of India’s political and intellectual leadership in the Fifties. Purchases of manufactured consumer goods were not significant in understanding changing lifestyles. The interest was in calories consumed. Dandekar and Rath used NSS data in 1971 to develop a calorie-consumption-based measure for poverty in India. This measure is still in use, although the consumption basket has changed radically for most people and the relevance of that poverty measure is now being questioned.

Some well-known economists criticized the NCAER-MISH data. Some said that it was impossible to manage data from such a huge sample; there were bound to be enormous sampling and non-sampling errors — that is, false entries; respondents were unlikely to give correct answers and at least some of the responses on income and expenditure would have been cooked up. But NCAER persevered despite the great financial burden. It was tempted many times to give up, but the data was unique and no one else could do it.

The difficulty was the inability of NCAER, like so many research and academic institutions, to market it and find new customers. The costs were more than the revenue earned from a few forward-looking companies like Lever and Hawkins who pioneered in the use of this data for marketing. For a few years, the planning commission gave the effort some financial support because of the extraordinary value of the data. But that support stopped by 1993.

The NCAER, struggling as it was to pay its staff salaries each month, continued by economizing on costs. The sample size was reduced without affecting data quality adversely; sub-contracting of data collection under rigorous supervision also helped to reduce cost; farming out data entry helped. The media found the data interesting and publicized it. Worldwide interest was aroused when NCAER began to release data by income categories on product ownership and purchase. With the hype about a reforming India, data on the size and penetration of purchase gave investors an idea of the potentials in Indian markets.

The changing income patterns were a revelation for most. The revealed dimensions of the Indian market transformed the perception of India as a country with abysmal poverty and low levels of income whose people barely got enough to eat and could never afford to buy manufactured consumer goods. The poor were now seen as a huge market if products were designed and priced for them. NCAER used the large sample to shed light on household financial investments, health expenditures, and so on.

The latest report for 1998-99 just released, is four years after the event. This is common. NCAER must urgently review its methods for data collection and analysis and find ways to speed up the release so that the data is not old history but describes the immediate past.

These surveys have become primarily a source for understanding the changing income distribution by states, large towns, social classes, and so on. As in past years, there is a distinct upward movement in income levels. The proportion of the poorest at the bottom is falling, and more sharply in urban than in rural India. The proportion of households in the highest income levels is rising fastest, although the actual numbers of households is still relatively small. The east continues to show the slowest change in improved income distribution. The proportions of households amongst the bottom and the higher levels of income are improving much more slowly. Consumable products seem to be growing more slowly than durables. It would be useful to see if there is a switch to cheaper local products versus those of the multinational companies.

MISH-information on product purchase gives a graphic picture of the materialism of the Indian consumer. He is no different from others around the world. MISH collects data on brand shifts but does not share it. It gives information on the increasing use of borrowings to finance purchases, the buying behaviour among different classes, and thus enables an understanding of the tremendous socio-economic upheavals taking place as incomes rise and people climb the consumption ladder.

We have for long been misled by the data from the NSS which has appeared to show that poverty levels have remained high even in the Nineties. But NCAER data shows that even many below the poverty line buy soap and own transistor radios, mono-cassette recorders, and so on. The Dandekar-Rath concept of poverty in India developed in 1972 is no longer relevant. We have to find newer definitions for poverty and they must include an understanding of changing dietary habits and of other consumption.

T his data merits close study by social psychologists, sociologists, anthropologists and economists. One must only lament the poverty of our humanities teaching and research that we do not consider consumption as an excellent reflector of change.

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