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regular-article-logo Wednesday, 17 April 2024

Uneven rise: Editorial on data revealing growth in expeditures in both urban and rural households

The data do reveal an increase in the growth of consumption expenditure, more so in the rural areas. However, the level of expenditures continues to be higher for urban households

The Editorial Board Published 29.02.24, 08:11 AM
Representational image.

Representational image. File Photo

The latest Household Consumption Expen­diture Survey for 2022-23, carried out by the National Sample Survey Office, reveals a growth in expenditures for both rural and urban households. The survey results are from 2011-12 to 2022-23. During this period, the average monthly per capita expenditure in rural households grew by 40.4%, while that in urban households rose by 33.5%. But some caveats are in order while interpreting the results. A comparison between 2011-12 and 2022-23 may not be fully warranted since the methodology used was different in 2011-12. This time, the set of goods included in the exercise is much bigger. The year chosen for the survey, 2022-23, is also an outlier year. After the ebbing of the pandemic, 2022-23 saw the release of a large amount of pent-up demand for consumer goods and services. Hence, the numbers may be biased on the upper side, not reflecting a usual year. It must also be pointed out that the survey conducted by the NSSO in 2017-18 was scrapped by the Government of India citing poor data quality. However, the survey results had been allegedly leaked to the press and what emerged from the leak was unpalatable to the government. The GoI is evidently pleased with the outcome of the latest exercise. In a nation starved of credible economic data, there are now at least some pointers — a rarity — to work on for analysts.

The data do reveal an increase in the growth of consumption expenditure, more so in the rural areas. However, the level of expenditures continues to be higher for urban households. At 2011-12 prices, the level of per capita rural expenditure stands at Rs 2,008 while per capita urban spending is Rs 3,510. At current prices, the per capita rural spending is Rs 3,773: the corresponding figure for per capita urban spending is Rs 6,459. For the first time, the proportion of spending on food items has fallen below 50% in rural India. There is also a marked increase in discretionary spending on consumer services and durables. Worryingly, according to the survey, in urban India, the per capita spending by the top 5% is 10 times that of the spending by the bottom 5%. This reflects the great degree of income and wealth inequalities. Indeed, it may be an underestimate of the divergence, given the degree of economic inequality in India. India’s economic growth is raising actual spending by consumers as well as their aspirations and ambitions. But the bonanza of growth is being distributed unevenly across the economy. For some, more consumption is about the urgent need to survive. For others, it is about living to consume more and more material goods.

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