| Publications : |
| Rural household expenditure capacity only half of urban households |
|
|
|
| |
1) Consumption expenditure rural households is only half the expenditure of urban households. The gap between rural and urban household expenditure widened from 1:1.4 in 1977-78 to 1:1.9 in 2004-05 (RBI). |
2) For rural India: Real MPCE increased by only 21% over the last 14 years (FY 94 to 2008) where as the real MPCE of urban India increased by 36% during the same period. |
3) The annual real terms increase during FY 2008 in average rural MPCE was 2.2% whereas urban MPCE increased by 5.4%. |
4) The annual increments for Fy 07 was 2.7% for Rural MPCE whereas urban MPCE increased by 4.7%. So much for inclusive growth espoused by the XI plan! |
5) The share of food in the average consumption basket has shown a steady decline in both urban (60% to 40%) and rural (64% to 52%) areas. While income levels have been rising everywhere, urban households have been spending less on food in proportionate terms compared to rural households. |
(6) Within the food basket, the share of cereals has been coming down rural house holds from 33% to 16% and urban house holds from 21% to 9%. |
| (7) Across States, there are significant disparities in consumption expenditure. Chattisgarh, Orissa, Bihar and Madhya Pradesh had an MPCE less than Rs. 650 in rural areas. Some of these States have fared poorly in terms of urban MPCE as well. On the other side, Kerala topped the list under both urban and rural MPCE. (Rs.1,383 rural and Rs. 1,948 urban. |
| (8) Nearly 82% of rural households had 1.00 hectares or less with MPCE of less than Rs.750. |
1.Avg. Monthly Per Capita consumer Expenditure 07-08 (MPCE)-NSSO :
|
For rural India: Real MPCE (measured using a price deflator with 1987-88 as base) grew from Rs.163 in 1993-94 to Rs.196 in 2007-08 – an increase of 21% over the last 14 years. |
In urban India: Real MPCE (obtained using a similar deflator with base 1987-88) grew from Rs.268 in 1993-94 to reach Rs.364 in 2007-08 – an increase of 36% in the last 14 years. |
The annual real terms increase from 2006-07 to 2007-08 in average rural MPCE was 2.2%.
The corresponding annual increments from 2005- 06 to 2006-07 2.7% for Rural MPCE |
In average urban MPCE was 5.4%.
4.7% for urban MPCE. |
Rural |
Urban |
Rs.772- About 65% of the rural population had MPCE lower than the national rural average |
Rs. 1472- For urban India the corresponding proportion was 66%. |
Around one-half of the Indian rural population belonged to households with MPCE less than Rs.649 |
The corresponding level of MPCE for the rural population had been estimated as Rs.580. |
The survey estimated that in 2007-08, around one-half of the Indian rural population belonged to households with MPCE less than Rs.649 at 2007-08 prices.
In 2006-07, the corresponding level of MPCE for the rural population had been estimated as Rs.580. |
One-half of the population belonged to households with monthly per capita consumer expenditure less than Rs.1130. In 2006-07,
The corresponding level of MPCE for the urban population had been estimated as Rs.990 |
About 10% of the rural population had MPCE under Rs.400 |
The corresponding figure for the urban population was Rs.567, that is, 42% higher |
At the other extreme, about 10% of the rural population had MPCE above Rs.1229 |
The corresponding figure for the urban population was Rs.2654, that is, 116% higher. |
|
|
|
During 2007-08, half of the rural population had aggregate level of living less than Rs.649 per capita per month. |
This was Rs.1130 per capita per month for bottom half of urban population. |
Pattern of |
Consumption |
*Out of every rupee of the value of the average rural Indian’s household consumption during 2007-08, the value of food consumed accounted for about 52 paise. Of this, cereals and cereal substitutes made up 16 paise, while milk and milk products accounted for 8 paise |
*Out of every rupee of the value of the average urban Indian’s household consumption during 2007-08, the value of food consumed accounted for about 40 paise. Of this, cereals and cereal substitutes made up 9 paise, while milk and milk products accounted for 7 paise |
|
2.Average rural and urban MPCE and average household size in 2007-08: major States
|
| State |
Rural |
Urban |
| Chattisgarh |
582 |
1503 |
| Orissa |
559 |
1438 |
| Bihar |
598 |
1080 |
| Jharkhand |
592 |
1395 |
| M.P. |
634 |
1190 |
| U.P |
680 |
1121 |
| Karnataka |
819 |
1668 |
| W.B. |
702 |
1452 |
| Assam |
799 |
1452 |
| Gujrat |
875 |
1471 |
| T.N. |
834 |
1410 |
| Maha |
868 |
1709 |
| Rajasthan |
801 |
1265 |
| A.P. |
816 |
1550 |
| Haryana |
1034 |
1628 |
| Punjab |
1273 |
1633 |
| Kerala |
1383 |
1948 |
All India 2007-08
2006-07
2005-06
2004-05 |
772
695
625
579 |
1472
1312
1171
1105 |
|
3.Rural and urban population below specific MPCE levels, all- India, 2005-06
|
Rural urban disparities are starkly evident from the table below. While about 20% of urban population is below MPCE level of Rs 580, nearly 60% of rural population is below that level. While 37% of urban population is above the MPCE level of Rs 1100, only7% of rural population is above the comparable level.
|
| Rural |
|
Urban |
|
| MPCE Level |
% of population below the level |
MPCE Level |
% of population below the level |
| 365 |
18.7 |
580 |
21.8 |
| 580 |
58.9 |
1100 |
62.7 |
| 690 |
72.3 |
1380 |
75.7 |
| 1155 |
93.2 |
2540 |
93.5 |
|
| 4.Regional Disparities-Average MPCE: States and all-India |
Average urban MPCE (Rs.1472)
by 90.7% at the all-India level. |
exceeded average rural MPCE (Rs.772) |
Kerala (Rs.1383), Punjab (Rs.1273) and Haryana (Rs.1034) had the highest rural MPCEs. |
Odissa had the lowest MPCE (Rs.559) in the rural sector. Three other major States – Chhattisgarh, Jharkhand and Bihar – had MPCE under Rs.600 |
Kerala had the highest MPCE (Rs.1948) in the urban sector as well. Four other States – Maharashtra, Karnataka, Punjab and Haryana – had MPCE exceeding Rs.1600. |
Bihar and Uttar Pradesh had the lowest urban MPCEs (close to Rs.1100). Nine major States had urban MPCE between Rs.1200 and Rs.1600. |
|
5.Land Ownership and Expenditure pattern |
| More than one-half (nearly 52%) of rural households in India possessed land of size 0.20 hectares or less, with nearly 35% possessing 0.01 hectares or less. Another 30% possessed land of size 0.21-1.00 hectares. Thus nearly 82% had 1.00 hectares or less, and only 18% possessed more than 1 hectare. |
| % Break-up of Rural Households by size class of land owned-All-India07-08 |
| Size of land (ha) |
% households |
Average MPCE(Rs) |
| Landless |
34.6 |
736 |
| Up to 1 ha |
47.0 |
740 |
| 1.01 to 2.00 |
11.5 |
810 |
| 2.01 to 4.00 |
4.8 |
950 |
| 4.01 to 6.00 |
1.1 |
1026 |
| Above 6 |
1.0 |
1170 |
| Total |
100 |
772 |
|
In general, average MPCE increased with size class of land possessed.
Landless and upto 1 ha have practically the same average MPCE in spite of one class owning 1 ha land, and it needs to be remembered here that the lowest two size classes would contain many households which derive their livelihood from non-agricultural activities and are therefore not restricted by the amount of land they possess. MPCE level of those with 2-4 ha land is just, Rs 950, not enough to meet both ends meet what with increasing cost of living and medical expenses and the 2% rural households having above 4 ha land with MPCE OF just over Rs 1,000, More than 35% of urban households have income over Rs 1,000. |
|
Source:NSSO/R 64/Household Consumer Expenditure in India 2007-08/ Mar 10
Consumer Expenditure Survey of the 64th round of NSS, carried out in 2007-08
|
6.EXPENDITURE PATTERN
|
| 6.i. The average Indian household spent about three-fourth of their income on routine and nonroutine expenditure in 2004-05. The rural-urban divide is evident in the spending patterns of households. |
| While rural households spend (on an average) Rs 18,400 on food items in a year, urban households’ spend level on food items is Rs 26,860. Rural households’ expenditure on non-food items is lower - at Rs 14,840per year - compared to urban households’ expenditure of Rs 32,270 per year. While non-routine expenditures account for around 13.6 per cent of income in rural areas, the figure is marginally lower at 10.6 per cent in urban areas – for the country as a whole, it is 12.2 per cent. |
Urban households spend around 45 per cent of their income on food while the figure is around 55 per cent in the case of rural households. There is a large difference in the proportions spent on housing (5.9 per cent in urban areas versus 3.8 per cent in rural areas) and on education (8.7 per cent versus 6.4 per cent). But expenses in other areas like health (4.7per cent versus 4.6 per cent), clothing (7.1 versus 6.8 per cent) and buying durables (4.9 versus 5 per cent) are not too dissimilar. Among non-routine expenses, expenditure on social ceremonies has a major share and accounts for 52 per cent. Medical emergencies is the next major item with households spending about 27 per cent, followed by large expenses on education (8 per cent) and leisure travel (4 per cent).
|
6.ii. EXPENDITURE PATTERN BY OCCUPATION
|
| As income levels vary across various occupation groups (i.e., major source of household income), both expenditure levels and patterns also change dramatically. Households whose main source of income is salaries/wages have the highest annual income as well as the highest annual consumption expenditure. They spend more on non-food items (Rs 33,560 or |
| 55%) than on food items (Rs 27,975 or 45%). The next group of high earners and spenders are households whose chief source of income is self-employment in non-agricultural activities. Earning about Rs 95,316 per |
year, these households spend Rs 55,773, of which Rs 29,173 (52%) is spent on non-food items and Rs 26,601 (48%) on food items.
|
| In terms of share, food expenses (which comprise 51.1 per cent of all routine expenditure at the all-India level) rise to 59.2 per cent in the case of households headed by labourers. This falls to 54.4 per cent in the case of households headed by agriculturists and to 45.5 per cent in the case of households where the chief earner is a salary earner. |
| Expenditure on housing, which is 4.7 per cent at the all-India level, is a much lower 3.8 per cent in the case of households headed by agriculturists. This rises to 5.6 per cent in the case of households headed by the salaried class. There is little difference in the case of expenditure on health (between 4.4 and 4.8 per cent), clothing (6.7 to 7.2 per cent) or that on durables (4.8 to 5.1 per cent). The share of expenses on transport and education, however, vary significantly.While households headed by labourers spend just 7.2 per cent of their routine expenses on transport, this rises to 11.9 per cent in the case of the salaried classes. |
| Education forms 5.1 per cent of the routine expenses for a household headed by a labourer and this rises to 9.4 per cent in the case of a salaried household. |
| There is little difference in what constitutes non-routine expenditure across various occupation groups when it comes to weddings and other such social expenditures. The differences widen when it comes to medical and education expenses. For instance, medical expenses account for 40 per cent of non-routine expenditure for households that derive their major source of income from labour, which is the highest among all groups. |
6.iii.EXPENDITURE PROFILE BY EDUCATION LEVEL
|
| Since level of education and source of income are interrelated (for instance, households headed by graduates are likely to have salary/wages as their major source of income) impact of education shows similar pattern |
| when it comes to spends. Food expenses, which comprise 51.1 per cent of all routine expenditure at the all-India level, rise to 59 per cent in the case of households headed by illiterates. This falls to 43 per cent in the case of households headed by graduates. In absolute terms, graduate households spend more on non-food items (Rs 41,692) than on food items (Rs 31,509). Illiterates spend less than half of what graduates spend on food but still end up spending more on food than non-food items. |
| Expenditure on housing, which is 4.7 per cent at the all- India level, is a much lower 3.5 per cent in the case of households headed by illiterates and this rises to 5.5 per cent in the case of households headed by graduates. |
There is little difference in the case of expenditure on health (between 4.5 and 4.9 per cent), clothing (6.7 to 7.6 per cent) or that on durables (4.8 to 5.4 per cent) between the households with different levels of education of chief earner. The share of expenses on transport and education, however, vary significantly.
|
While households headed by illiterates spend just 7.9 per cent of their routine expenses on transport, this rises to 12.6 per cent in the case of graduate households. Education forms 5 per cent of the routine expenses in a household headed by an illiterate and this rises to 9.6per cent in the case of a graduate household.
|
6 iv.IMPACT OF INCOME
|
As in the case of level of earnings, the spending pattern varies significantly across income quintiles. The expenditure patterns of Indian households in the lower-income groups is skewed towards high expenditure on food items. Food expenses, which comprise 51.1 per cent of all routine expenditure at the all-India level, rise to 61.5 per cent in the case of households in the lowest income quintile, and this falls to 43.2 per cent in the upper-most income quintile.
|
| The results also reveal that it is only households in the top quintile (Q5) that spend more on non-food items. Households in the remaining quintile groups spend more on food items. Consider this: While the bottom quintile (Q1) spends Rs 13,377 on food items, its expenditure on non-food items is just Rs 8,377. In contrast, the top 20 per cent group (Q5) spends |
Rs 32,149 on food items and a bigger amount on nonfood items (Rs 42,248).Spending patterns on other items such as housing, transport, education, clothing and durables increase substantially for the top 20 per cent households compared to other groups. Expenditure on housing,
|
| which is 4.7 per cent at the all-India level, is a much lower 3.5 per cent in the case of households in the lowest income quintile and this rises marginally to 4.8 per cent in the top-most quintile. While households in |
the lowest income quintile spent around 7 per cent of their expenses on transport, this rises to 12.9 per cent in the top-most income quintile. Education forms 5.7 per cent of the routine expenses of a household in the
|
| lowest income quintile as compared to 9 per cent in the case of the top-most income quintile. There is littledifference in the case of expenditure on health (between 4.5 and 4.8 per cent), clothing (6.8 to 7.1 per cent) and durables (4.5 to 5 per cent). |
Expenses on weddings and other social ceremonies account for around 58.1 per cent of all non-routine expenses in households in the lowest income quintile and this falls to 51.4 per cent in the topmost quintile. Medical expenses, similarly, change as a fraction of nonroutineexpenses according to each income quintile.Source: NCEAER Study-2007
|
KRSR/170710
|
